Looking for long-term goals for homeowners? Want to set financial goals for homeownership?
As a homeowner, you have so many financial responsibilities. Saving for your downpayment and affording your monthly mortgage payments are just the beginning.
Sorting out annual home expenses might not be your favorite activity in the world, but it certainly can’t be avoided if you’re a homeowner.
Being financially disciplined with your home expenses will add structure and security to your life, and make both long-term and short-term goals for homeowners much more achievable… if you set them.
As a homeowner, setting financial goals for your home can help you plan better for the future and enjoy the many practical and mental benefits that come alongside having lifelong financial security and stability.
Why Are Financial Goals For Homeowners So Important?
Owning a home might sound like an expensive ordeal (and it is), but many people forget about how lucrative and beneficial owning private property can be in a post-modern world.
Yes, it can be pricey to maintain. But if kept in good condition, home properties can serve as a life investment strategy that pays off both financially and otherwise until the end of your days. And probably into the days of future generations, too.
That said, the only way to benefit from homeownership is through the careful and diligent practice of being financially disciplined. Keeping records of everything, cutting unnecessary costs, and actively investing in the value of the space you occupy can mean you reap the benefits of homeownership for the rest of your life.
Setting smart financial goals is one way to maintain a grip on rising inflation and economic flux in recent years.
Let’s find out more about what that means and how to accomplish it using simple, straightforward strategies.
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Is Buying A House A Financial Goal?
For many people, buying a house is a major financial goal. However, it is the first step in a long journey of maintenance, upkeep, expenses, and commitment.
It is the kind of thing you have to go into with a well-rounded understanding of what that commitment entails, and a plan for how to maintain its value over a long period of time.
Setting both short-term and long-term goals for homeowners is key to extracting the most benefits out of your investment and ensuring the property is utilized to its full potential for as long as possible.
It’s important to start thinking about your financial goals, even if you’re just starting to learn how to save for a house while renting. That’s just the beginning!
The Difference Between Short and Long Term Financial Goals
When it comes to financial goals for homeowners, both short-term and long-term represent two very different aspects of saving. While the words themselves may sound self-explanatory, the true definition of these two saving styles is worth looking into.
Setting Short Term Homeownership Goals
Short-term financial goals involve a temporary savings plan, typically spanning over a length of time between one and five years. However, even short-term financial goals can stretch on for longer – the key element here is the attitude of impermanence and forthcoming reward.
When it comes to financial goals for homeowners, short-term financial goals will look like savings plans or projects which apply to the very near future.
Things like home maintenance for fundamental issues (such as a new geyser, stripping down old wallpaper, or installing solar panels) can all be considered short-term financial goals to aspire to. Short-term financial goals are about covering your bases before they grow out of control.
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Vs. Making Long Term Goals
Long-term financial goals, on the other hand, focus more on the big picture. Where short term goals focus on the “here and now,” long term financial goals look forward into the future to see what you can do to improve your situation.
Having long-term financial goals means being able to support yourself and those under your care for an extended period of time. By thinking about and planning for the future now, homeowners can be more prepared for the financial burdens that may arise later on down the line.
Neither of these two aspects of financial goals is more important than the other. Both require patience, commitment, and self-discipline. Having both long-term and short-term financial goals for homeowners is the key to unlocking a strong and sustainable relationship with their home.
Short-Term Homeownership Goals
If you are new to homeownership or want to stay up-to-date on the latest news around financial goals for homeowners, you might be looking for some pointers to help separate the jargon from the practical advice.
Short-term goals are goals you can set and achieve within a shorter period of time, typically over several years (as opposed to long-term goals, which may require consistent input over a decade or more). Here are some short-term goals you can set for yourself and your home:
#1. Emergency Fund
A basic emergency fund is an easy way to familiarize yourself with financial goals that will prove useful time and time again. Emergency funds are essentially stashes of money set aside every month to act as a cushion for any unexpected costs that you encounter during your life.
Accidents, surprise hospital bills, and car maintenance are just some examples of how homeowners can suddenly face unexpected financial challenges. While it’s recommended that homeowners invest in both a short-term and long-term financial plan, either can play a hugely supportive role over the course of their lives.
Emergencies of every kind rarely happen when one is expecting them. But that doesn’t mean we have to be unprepared. Setting aside a percentage of your income each month for an emergency fund can save you financial trouble when you need it most.
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#2. Minor Repairs and Improvements
Minor repairs and improvements to your home form a part of some of the most important financial goals for homeowners. Smaller repairs such as fixing leaky pipes, repainting the walls, or installing a new kitchen countertop are all improvements that add value to your home over time.
Not sure how much to save for this short-term homeowner goal? The average annual cost of maintenance ranges from $950 to $9,820. Estimates vary, but these estimation rules can guide you:
- The 2-4 percent rule: Save two to four percent of value of your home each year
- $1 Per Square Foot: Put aside a dollar for every square foot of liveable space
- 10 Percent Rule: Save ten percent of the annual income tax
No matter which estimation rule you use, the key takeaway is to save for repairs!
#3. Credit Card Debt Payments
That’s right, you can use the privilege of being a homeowner to help pay off your credit card debt. As long as you have enough equity in your property and can qualify for a bigger mortgage, you can remortgage to raise capital and pay off credit debts.
In 2021, the average American citizen has $5,525 in credit card debt. This incredibly high number emphasizes just how much Americans struggle to relieve themselves of debt (especially with regards to credit card usage), and how easy it is to become manipulated into gaining more.
Homeowners of all kinds would do well to use their property as a financial support strategy, should their credit card debt become too deep. This is a worthwhile short-term goal to set.
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#4. Personal Goods
If you have the means, setting aside some money to pay for personal goods can have life-changing benefits. The security of knowing that you can pay for those special, additional yearly costs can make your life a lot easier later on down the line.
There is no precise description of what personal goods finances are. It depends on your individual needs as a homeowner. Whether you want to set aside money for a future car, holiday, surgery, or a new mattress, setting this short-term financial goal can be a highly rewarding process.
#5. Wedding or Travel
Another potential short-term financial goal for homeowners to consider is that of a wedding or trip overseas. Wedding celebrations can become highly expensive, and saving for them is essential if the lucky bride and groom (or their families) want to remain out of debt.
While traveling might not seem like a hugely practical thing to save for, many people with family or loved ones overseas can use this practice as a way to reconnect with what is important in life.
A trip to your home country or to see a sibling’s new baby are both worth saving up for—on a short term or basis. The beauty of a short-term financial goal is that it can really be for whatever the homeowner feels is most important and relevant to their life.
This is especially important if you plan to purchase a home after a wedding or gift a sizeable downpayment to a child one day.
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Long-Term Homeownership Goals
Now that we’ve established some basic short-term goals, let’s look at some long-term goals for homeowners to reach over a more extended period of time. Long-term financial goals ask us to take a look at the grand scheme of things and prepare for the future accordingly.
These goals are ones that will have to be structurally implemented into your lifestyle for several years before reaping the benefits. But they are worth it.
#6. Paying Off a Mortgage
While there’s some debate about whether paying off your mortgage early or on time is best, there’s no doubt about the fact that having options is preferable. Mortgage commitments can weigh heavily on the mind when drawn out and can be very stressful to upkeep.
However, the assets that your property provides you with can help you pay off your mortgage sooner than initially anticipated, relieving the stress that comes with mortgage debt and freeing up your finances for other important affairs.
You can use the assets provided by your property to pay off mortgage debt sooner than planned, ultimately allowing you more financial freedom and security.
#7. Saving for a Retirement Fund
As you approach retirement age, your monthly expenses should start to get smaller and smaller. Having a retirement fund set in place can hugely alleviate retirement anxiety and enable you and your family to start focusing on what really matters.
You can contribute to your own retirement fund by lowering household costs. One way of doing this is to do your housework for you. You can rent out your property while staying in a smaller, cheaper space. Just ensure that the rental covers all of your expenses, including amenities and landlord insurance.
#8. Child’s Future College Tuition
Goals for homeowners can include planning for your children’s future too. Being able to save for your children’s future tuition costs is a massive benefit of setting long-term financial goals.
College tuition costs more and more every year, and saving in preparation for those future expenses will make a tremendous difference to both your child’s life and your own.
One of the most viable methods of saving for your children’s future tuition is through borrowing against the equity in your home.
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#9. Investing in Business
Investing in a small business also becomes possible when you properly embrace financial goals for homeowners. Running your own business (or investing in someone else’s) can be a highly rewarding process that many people use as a stepladder to achieve even bigger goals.
As a homeowner, the bank may allow you to borrow against the equity that you’ve developed in your home and extract the funds necessary for financing a small business.
Depending on the nature of the business, you may even be able to use your home as an official space for enterprise, thus cutting down further on rent and maintenance costs.
#10. Contemplate Income Property
As the housing market rebounds around the world, now might be a good time to consider setting up and investing in an income property. An income property is financially self-sufficient—the money made from using the space goes straight back into maintenance, running, and improvement costs.
AirBnB is a good example of an income property. Less consistent than renting, but often more profitable. If you tap into the space available on your property to generate further income, you can use that financial power to invest in another property, and then another.
Eventually, the goal as a homeowner is to have the properties within your legal power support themselves in a financially independent way. A home that generates its own income can get used as financial aid for paying off debt, splurging on a personal expense, or investing in more property.
Goals for Homeowners That Pay Off
As you can see, goals for homeowners can be big or small and they can be short or long term.
The important factor is to set goals for yourself and work towards them, as buying a home can always be a major investment. You just need to know how to make it work for you.
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Sign up below for your FREE SMART Goals Worksheet + get weekly tips to help you slay your goals.And remember, securing your mortgage and purchasing your home is only the beginning of your journey to achieving financial goals. That’s when the responsibilities of homeownership begin, and you need to continue to save and manage your finances.
Use these long-term and short-term goals for homeowners to help you to build wealth and prosperity for yourself, and your family.
What financial goals for homeowners will you set?
More About Guest Contributor
Margot is a content champion for a variety of online publications. She often covers topics that cater to business owners and entrepreneurs with a strong focus on legal finances, business management, and a few other topics.
Last Updated on July 26, 2024
