Why is it important for individuals to set both short-term and long-term financial goals?

Setting both short-term and long-term financial goals is vital for individuals as it establishes a structured plan for managing their finances. Short-term goals, such as saving for a vacation or paying off a small debt, help individuals address immediate financial needs and build a sense of accomplishment. Long-term goals, like saving for retirement or buying a home, provide direction and motivation over an extended period. Together, these goals create a roadmap that guides financial decision-making and fosters disciplined spending and saving habits.

A structured financial plan ensures individuals are not only reacting to financial situations as they arise but are instead proactively preparing for the future. This approach enhances financial stability and allows for more informed choices, ultimately leading to greater financial security.