ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Long-term goals, like buying a car, paying for college, or buying a house, often take months or years to reach. Sometimes people put off saving for small or large purchases. But not planning for or saving for these things may mean that they don’t happen.

Detailed explanation-2: -Short-term goals are within a five-year window, while long-term goals are at least five years out. CDs, money market accounts, and traditional savings accounts are best served for short-term goals. Investing is generally reserved for long-term goals so there’s time to withstand performance fluctuations.

Detailed explanation-3: -At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

Detailed explanation-4: -Mid-Term Financial Goals Some mid-term goals may be to finish paying off your student debt, saving for your wedding, saving for your first home, or even doing renovations to your current home.