Whether you’re hoping to save money, boost your credit score, or sock away some money for a major purchase, there’s never a bad time to make a plan for your finances. Creating financial goals doesn’t have to be intimidating – a short-term financial goal is a simple strategy that can help you become more financially stable. This notion, of course, leaves the question: What are short-term financial goals? Read on for some examples to work toward sooner than later.
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What Are Some Examples of Short-Term Financial Goals?
Short-term financial goals are meant to be attainable within the near-distant future. By creating these goals, you can make a plan of action to help meet your goals. Here are a few common examples of short-term financial goals that you may want to try.
- Emergency fund. If you don’t have an emergency fund, now is as good a time as any to create one. That extra money can be key in case anything unexpected happens, such as a job loss or a medical bill. Your fund should total three to six months of your ordinary income, and you can stop adding to it when it reaches this amount. You should funnel 10 to 15 percent of your income toward your emergency fund every month until you’ve met this goal. With this in mind, you’ll be well prepared for a rainy day.
- Payments toward insurance or loans. Whether student loans or car insurance, monthly bills can be a hindrance to your financial goals. They’re a reality that can feel less annoying if you budget for these monthly expenses, like your phone bill, or monthly installments, like student loan payments. And when you do pay off your loans, you can funnel the same amount of money per month toward your other short term financial goals.
- Credit card debt payments. The interest rates on credit cards can be quite high, so repaying your credit card debt is a good short-term financial goal, and one you may want to consider prioritizing. You’ll want to put more money toward your cards with the highest interest rates to pay those down faster than other cards. For example, let’s say one of your credit cards has a 20 percent interest rate while the other has a 18 percent rate. You should then pay the minimum on the latter and put more money towards the former.
- Travel. When’s the last time you took a vacation? Don’t remember? Well, now’s the time to start planning. Set aside some money in your savings account every month to build toward your dream getaway down the line. This also ensures that you can enjoy the vacation you want to take without putting those costs on pricey, high-interest credit cards.
- Weddings. Weddings are notoriously expensive. Once you add up food, venue, decor, dresses, and more, you might feel like you broke the bank. Short-term financial goals can help you save for your wedding. You can get married without feeling like it cost you all your money.
- Home improvements. Maybe you’re itching to add a pool into your backyard or your basement looks like it could be in a horror film. If real estate improvements are among your top priorities, don’t wait until you win the lottery to achieve your goals. Save a little money each month, and you might achieve this goal sooner than later.
6 Short-Term Financial Goals to Try in 2022
Maybe you want to create a short-term financial goal so you can manage your money more effectively and positively impact your future. Or maybe you just want to have extra money on hand at all times. The question then becomes, where do you begin? The below seven short-term financial goals all make great starting points.
Down Payment on a Home
For many people, homeownership is a big personal finance goal. It’s also a challenging one since, to buy a home, you need enough money for a down payment. That’s why once you determine how much you’re willing to pay for your home, it’s time to start saving.
It’s best to put down 20% of the total purchase price into your down payment, although some people put down less. However, 20% is more desirable because this way, you can forgo monthly private mortgage insurance (PMI) payments. While this financial goal may take longer to achieve than others, it’s worth chasing – save smartly, and you’ll get there eventually.
Saving up for your dream family vacation can feel easier if you set some short-term financial goals. To prepare adequately, you should research how much your vacation might cost. You should account for flights, hotels, shopping, food, souvenirs, and events.
Once you have a rough estimate of how much your family vacation will cost and when you want to go, you can begin to put money aside each month. If you’re looking to make your trip a year from now, you have some time to save, so you can do so slowly. If you want to travel within a year, you may want to put more money per month toward the trip now.
Investments pay off in the long run – the short-term goal here is to start investing now. And as you invest, there are some things you should consider.
First, decide how much of your monthly budget you can feasibly invest. Then, decide how much risk you’re willing to take. Some investments are safer, which may feel more reassuring when you first start investing. When you’re finally able to choose an investment tool, you can plot out more long-term financial goals that can help you save for retirement.
Pay Down Debt
Your debts can quickly add up, leaving little extra cash to put into your short term financial goals. With savvy financial planning, paying back these debts can be a quicker, less stressful process. A savvy financial plan can help you put money toward your debt and pay it off faster.
Create And Stick To A Budget
How many times have you gone to the grocery store and ended up getting items that weren’t on your original list? It happens all the time, and it doesn’t do your wallet any favors. When you base your grocery list on a grocery budget, you avoid this issue. You can apply this same logic to virtually all your spending categories as well.
To properly set a budget, you need to know roughly how much you earn per month and how much of that money goes to your fixed expenses that happen every month, like your utilities, rent, or cell phone bill. With the money that’s left, you can then set ideal caps for how much you should spend. Be sure to set caps that are neither impossibly low nor so high you don’t actually put any money aside.
If you choose to cut your spending, you’ll have more money to put toward your short term financial goals. You could try shopping online only once a month, dining out less often, or commuting with a friend to work. These small changes can help you spend less and save more.
Another challenge you could try is, if you’re a coffee lover, skip the lines at your local barista and brew your own coffee at home. And every time the urge to go out for coffee strikes, put your coffee money in a jar for safekeeping. At the end of the month, count the money in the jar and put it toward a short term financial goal.
More Resources on Short-Term Financial Goals
These short-term financial goals are just a few of the many you can set for yourself. Depending on your age and financial situation, you might find other financial goals more relevant and realistic. No matter your goals, though, MoneyMash has resources to help you make the most of your money. Our guide to high-yield savings accounts – which can help you turn your money into more money – is a great start.