Short-Term Financial Goals: Examples to Help You Set and Keep Them

Person Holding a Wallet
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Everyone knows that they should save up for retirement. But that can seem far too daunting, especially when you are dealing with day-to-day expenses. This is where short-term financial goals come in. These are goals that are designed to help you set yourself up for success when it comes to those long-term goals.

What Is a Short-Term Financial Goal?

Short-term financial goals are goals that are smaller in scope and that have shorter timelines than your long-term financial goals. They may even be stepping stones on the path to your long-term goals. These are not day-to-day expenses but rather specific goals that you can achieve in 1-2 years. They are just as well thought out and strategic as long-term goals, they just have a shorter lifespan. Short-term goals can be things like saving up for a down payment for a new car, paying off credit card debt, or saving up a certain amount of money.

Short-term goals also typically have a specific date assigned to them. Long-term goals may be something like “have x amount of money saved up by the time I retire” or “pay off my student loans within 20 years” while short-term goals may be “pay off my $5k in credit card debt by June 1st, 2021”.

Why These Goals Are Important

Without short-term goals, we can often lose sight of our long-term goals and may even do things that hinder our progress or make meeting our goals difficult. People are more likely to spend irresponsibly if they aren’t working toward a specific goal. This is true even if you have a long-term financial goal you’re working toward. Because long-term goals have a longer timeline and you have to wait a long time before you even get close to achieving them, they can seem too far away or intangible.

Buying tickets to a concert or spending a few hundred getting new clothes don’t seem like things that are going to stop you from being able to retire. They do, however, seem like things that might stop you from meeting your goal of saving up for new house furniture by the end of the year.

Short-term goals can also help you to get out of cycles of credit card debt. Along with budgeting, these goals can help you to eliminate the debt and stop yourself from building up more in the future. If you give yourself a deadline for when you’ll have your credit card debt paid off, you’re more likely to monitor your spending more carefully in order to avoid racking up more credit card debt or wasting money you could be saving instead.

How to Set Short-Term Financial Goals

Setting a short-term goal is more involved than just saying “I want to buy a new couch”. You need to be strategic about your goals. You need to set specific deadlines with specific dollar amounts. You need to identify how you are going to achieve your goal as well. It’s all well and fine to say you want to do something but if you have no idea how to start doing it, it’s not going to be easy to achieve the goal.

The first step is to figure out what your financial goals are in the first place. Make a list of anything and everything you can think of. Some of the goals on this list may be long-term, some short-term, and some somewhere in between. If you are focusing on the short-term goals only, figure out which goals from your brainstorming session fall into that category.

Next, you need to figure out what your priorities are. Maybe you have no rainy day fund and you have credit card debt to pay off. You would most likely want to pay off the debt first or put more money toward paying off the debt than you’re putting into the rainy day fund, at least until the debt was all paid off.

Perhaps you want to save up to go back to school, buy a new car, and have money to go on vacation next summer. You need to figure out what is most important to you and what is more pressing. If your current car is working just fine, maybe saving up for the vacation first is more important to you. But, if you’re using public transportation because your car broke down, that goal would be a higher priority.

Once you have your goals identified and prioritized, you need to set timelines for them. These can be specific dates, a date range, or just the number of weeks, months, or years you think the goal will take to complete. You should have some sort of specific timeline, however, as you are more likely to actually work on and achieve the goal if there is a deadline to meet.

You need to look at your current finances as well. Credit card debt, student loans, monthly bills, etc. are all going to impact how much money you’re able to save each month. You’re never going to be able to save up if you can’t get your credit card debt under control so you probably want to handle that before anything else.

If you are currently spending more than you’re earning or the amount you have leftover each month isn’t as much as you would like it to be, look at where you can cut your spending in order to have more to pay off debt or save.

When you’re in a place where you can start saving up money in order to meet your goals, you will want to assess and reevaluate your goals periodically. Maybe you were saving up for a new car but you had to dip into those funds for an unexpected medical emergency your rainy day fund couldn’t cover on its own. This would obviously keep you from meeting your original deadline for the goal and you would need to extend it. Perhaps you get a new job or a raise and you can move your deadlines up. By regularly paying attention to your goals, you’ll be able to better understand your ability to meet them.

Coins and Bills for Short-Term Financial Goals
Photo by Dmitry Moraine on Unsplash

Creating a Budget

Your top priority before anything else should be to make a budget for yourself. Track your spending in order to better understand where your money is going. People are often shocked by how much money they end up spending each month on certain things. A $5 coffee here and a $10 pair of shoes there doesn’t seem like much by itself but when you are constantly buying little things, they add up.

You can track your spending in a variety of ways. There are websites like Mint that keep track of everything you spend and help you put it into categories. You can create graphs and charts in order to visually see where your money is going each month. Many banks and credit card companies also have spending trackers that you can use. You can even create your own spreadsheet and manually track your spending by inputting receipts or looking at bank statements.

Once you know what you’re spending money on, you can start seeing where you might be able to cut your spending. This is especially important if you are having trouble saving money. Setting spending limits on things like eating out, entertainment, etc. can really help to save a lot of money in the long-term.

For example, if while tracking your spending you find out that you are spending $700 a month on going out with friends, you might want to take a look at that. Can you afford to spend that much each month? Do you really need to? You might want to figure out less expensive ways to spend time with your friends or set limits for yourself, such as limiting yourself to two drinks when you go to a bar or not buying any food when you go to a movie.

When you set a budget for yourself and have certain dollar amount limits for each category of your spending, you’re more likely to be able to save money. This doesn’t mean you’re always going to be able to stay exactly on budget because life doesn’t always work like that but it can definitely help to control your spending and make you more mindful of where your money is going.

Paying off Credit Card Debt

Credit card is what stops many people from being able to save money and achieve their financial goals. Because credit card debt accrues interest at very high rates, you are essentially throwing money down the drain each month by having it. Some people also get caught up in a vicious debt cycle. They put all their money towards paying off the debt, then if something like unemployment or an unexpected medical problem come up, they don’t have the money to cover it and get into more debt. Getting your credit card debt under control as soon as possible is definitely a top priority.

If you have large amounts of credit card debt, debt negotiation or refinancing may be things you want to look at. For smaller amounts, create a payment timeline. Figure out how much money you can save each month to put toward your debt and then make a timeline for having all the debt paid off.

Rainy Day Funds

A rainy day fund is money you can use for emergencies or unexpected expenses. You can’t plan for everything. You could lose your job tomorrow, your spouse could die, you could get into a car accident. It’s important to have money set aside for when things like this happen so that you know you’ll be able to cover any unexpected costs.

Starting with a smaller amount like $1,000 can help you to feel a sense of accomplishment and make the task seem less daunting. Once you have achieved that, your new goal may be to save up enough to cover three months worth of bills in case you lose your job. As you meet each goal for your emergency fund, you can create a new one.

Once you feel comfortable with your rainy day fund, or even while working on the rainy day fund if you’re able to, you can start setting other types of short-term financial goals. These are goals like saving up for a down payment on a car or house, setting up a vacation fund, purchasing new house furniture, etc.

Credit Card and Money in a Pocket For Short-Term Financial Goals
Image by Michal Jarmoluk from Pixabay

How Short-Term Goals Assist Long-Term Goals

As stated, long-term goals can sometimes feel too “far away”. They don’t always seem like they are affected by your day-to-day spending. Retirement seems like it is eons away and so you don’t focus on it. Needing a college fund for your child doesn’t seem like a pressing matter when the child hasn’t even been born yet. You won’t get the satisfaction of achieving these goals any time soon and they can fall on the wayside.

This is why setting short-term goals is so important. You can consider these milestones along the path to your short-term goals. If you pay off your credit card debt, set up an emergency fund, and establish a reasonable budget, it will be much easier to achieve those distant long-term goals. You will also be able to stay motivated by that sense of achievement you feel when you see your goals through to completion. When you are consistently being responsible with your money, saving up for retirement, for college, for a house, etc. will naturally be an easier feat to accomplish.

Sometimes short-term goals can even be specifically as stepping stone for your long-term goals. Take the college fund as an example. College can be extremely expensive and people get into 10s and 100s of thousands of dollars of debt to get a degree. Say your goal is $100k. That can seem extremely daunting and you may feel like you’ll never achieve that.

However, if you set a short-term goal to save up for the cost of a term of classes, that will seem much more doable in comparison. You’ll feel proud of yourself when you reach that goal and it will be reached much sooner than that long-term goal of $100k. After that, you set another short-term goal and then another, until you finally get to the point where your long-term goal seems within reach.

Short-Term Goals: The Key to Financial Success

Financial planning can be extremely difficult. It’s made even more difficult if you are living paycheck-to-paycheck or if you are having trouble getting out from under credit card debt. Long-term goals can seem out of reach entirely. However, when you set up specific short-term goals, you’ll make everything a lot easier for yourself. You’ll be surprised by how much you can actually achieve when you are constantly working toward a goal.


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