Setting financial goals can sometimes feel overwhelming, but breaking them down into short-term and long-term categories can make the process much easier. Short-term financial goals are typically objectives you aim to achieve within a year. They help create a roadmap to reach your larger aspirations. Here are three practical examples to guide you as you set your own short-term financial goals.
Life is full of unexpected surprises, and having a financial cushion can make all the difference. An emergency fund is a savings account specifically for unexpected expenses, like car repairs or medical bills. This goal is essential for financial security and can provide peace of mind.
Start by determining how much you want to save. A common recommendation is to aim for three to six months’ worth of living expenses. If your monthly expenses total \(1,500, your goal would be between \)4,500 and \(9,000. For a short-term financial goal, you might decide to save \)1,500 in three months.
To achieve this, you can set aside $500 each month from your paycheck. Consider automating your savings by setting up a direct deposit into your savings account. This way, you won’t be tempted to spend the money before you save it.
Notes: Adjust your monthly savings amount based on your income and expenses. If $500 is too high, you can set a smaller amount to make it more manageable.
Carrying credit card debt can weigh heavily on your finances. Setting a short-term goal to pay off a specific credit card balance is a proactive step toward financial freedom. Let’s say you have a credit card with a balance of $1,200 and an interest rate of 18%.
You might set a goal to pay off that debt within six months. This means you would need to pay $200 each month. To achieve this, you can look for areas in your budget where you can cut back on spending, like dining out or subscriptions. Additionally, consider applying any extra money, like a tax refund or a side hustle income, directly toward your credit card payment.
Notes: If you have multiple credit cards, prioritize the one with the highest interest rate, or consider a debt snowball approach by paying off the smallest balance first for quick wins.
Taking a break from everyday life can be refreshing, and planning a vacation can be a motivating short-term financial goal. Let’s say you dream of a beach vacation that will cost you \(2,000. You want to take this vacation in 8 months, which means you need to save \)250 each month.
To make this goal achievable, consider creating a dedicated savings account for your vacation. You can also look for ways to cut costs in other areas to contribute more to your vacation fund. For example, if you typically spend $50 a month on coffee, try brewing your own at home and direct those savings into your vacation fund. Additionally, you can search for discounts or off-peak travel times to stretch your budget further.
Notes: Consider involving friends or family if you plan a group vacation, as sharing costs can make the trip more affordable. You might also explore side gigs or freelance work to boost your savings.
By setting these short-term financial goals, you can take meaningful steps toward better financial health and create a solid foundation for your future aspirations.