When it comes to setting short term financial goals, it can be difficult to know where to start. Oftentimes, it’s easier to see the big financial picture for setting goals with their money – like being a millionaire before they are 30 (or whatever your goal might be).
The thing is, if you want to achieve some big financial goals, the best thing that you can do is begin by setting short term financial goals, like paying off a credit card or having an emergency fund.
You deserve to have the skills and the ability to set short term financial goals so that you can later on achieve bigger ones!
You also may want to create a strategic financial plan.
The Purpose Behind Setting Short Term Financial Goals
There are a lot of reasons to set financial goals. Not only do they help you stay on track with your spending, but it helps you get to where you want to be in life.
Oftentimes, when people are talking about financial goals, they are talking about long term financial goals. This can be anything from having XYZ dollars in the bank for retirement to owning multiple homes to anything you can dream of!
The thing is, in order to successfully achieve those long term financial goals, it is important to invest some energy in the smaller term financial goals. Think of these smaller goals as baby steps to help you achieve the overall greater financial goal.
The Type of Goal that You should Set for Success
The type of short term financial goal that you set will help dictate your success. If you can, try and set your goals to the S.M.A.R.T. goal system. This system stands for:
I love setting goals with this system in mind because it helps me know if my goals are complete or not. Setting up a short term financial goal through the S.M.A.R.T. goal system will help you narrow down your focus and know when/how your financial goal will be met.
Examples of Short Term Financial Goals
There are plenty of short term financial goals that you can set for you and your family to help you get on the path of a wealthy future by setting long term financial goals.
So much of acquiring wealth is taking baby steps toward smaller goals that can amount to larger goals. Here are a few short term financial goals that you can begin working on today.
Set an emergency fund
Having an emergency fund of at least 3-6 months of expenses is a common short term financial goal to start off your financial journey.
This fund is set aside in your savings for any emergency that may come your way that needs to be paid for immediately like the co-payment for an E.R. trip, your tires need replacing, you lose your job, or anything that will be a surprise payment.
Not only does Dave Ramsey recommend it as a beginner step in his 7 baby steps, but millions of people around the world state that this goal helped them dream bigger for their financial dreams.
Saving for a trip
One of my favorite parts of a trip is knowing that I can afford the entire thing. Absolutely none of it will end up on my credit card- thanks to this short term financial goal.
Whether I want to take my family camping for the weekend or celebrate my 10 year anniversary at a luxury 5 star resort, once I know the budget I like to plan as much as I can and- even more importantly- save for it.
This includes almost every part of the trip that costs money. From the flight, hotel, car rental down to the meals, activities, and even souvenirs!
Save for a Down Payment on a Home
If your dream is to become a homeowner one day, then it is in your best interest to start saving for that down payment as soon as possible. Depending on where you live, this can be a few thousand dollars, so this goal can be done in a relatively short time.
Depending on your home loan and the cost of your future house, there are different amounts that you will need to save in order to have a down payment.
My best advice? Do your research and contact a lender to help you get the best idea for how much of a down payment you need.
Pay Down Debt
If you happen to have some debt, you aren’t alone. In the spring of 2021, Americans hit a wall of 14.6 trillion dollars of debt. While this isn’t what you want to hear, the good news is that you don’t have to be one of them.
Depending on how much debt you owe will make this goal either long term or short term, but getting started is what is important. You deserve to be debt-free!
Sit down and look at everything that you owe with your partner and follow the steps below to begin paying off anything that you owe.
How to Set Short Term Financial Goals
When it comes to setting short term financial goals, there are so many ways for you to get started. Once you sit down to review your current spending habits and rearrange your budget to help you meet any goals, then the fun can begin.
There is just something special about making a plan to put away X amount of dollars each month and seeing that savings grow. No matter what your end goal may be, as you begin to see that savings account grow, magical things will happen.
As you get closer and closer to your goal, you will find yourself more determined and willing to make sacrifices to hit that financial goal.
Since we know that it won’t happen overnight, here are a few tips for success to help you set short term financial goals and successfully complete them.
Tips for success:
- Work with your partner to set a financial goal together. If you are both on the same page, not only will the goal be done quicker, but chances of success are much higher thanks to the accountability.
If you are alone on your journey to set short term financial goals, find a money mentor or a dear friend that will help you stay on course.
- Set one short term financial goal at a time. It can feel easy in the planning stage to want to save for X and pay off Y and put a little cash on the side for Z. Trust me, that is a quick drive into getting burnt out and giving up. Choosing one short term goal and knocking it out of the ballpark is a wiser method for success.
- For your short term financial goal, choose one that can be completed quickly. My favorite financial advisor, Dave Ramsey, introduced the idea of a ‘snowball effect’ to me and it has helped millions of people on their financial journeys! Essentially, you pick a goal that is smaller and begin to save for it as quickly as possible. The idea is that once you see how able you are to manage your spending, it will help give you and your family momentum to start setting more financial goals.
- Earn more money. While this may sound simple, it will definitely require more work on your end. You can start a side hustle, sell your extra furniture, or find ways to save money on your everyday expenses (like making coffee at home instead of visiting the coffeehouse). Another option? Talk to your boss and begin negotiating for a larger salary.
If you can commit to the fact that any extra money will go towards your financial goals, you will be able to set and achieve any short term financial goals that you can dream of!
- Give yourself reminders. Something that is true for almost any financial goal? It almost will never happen overnight. You need to find small things to help you be reminded every day of your financial goals. This can be post-it’s around the house, a lipstick message on your bathroom mirror, or even setting random reminders to go off on your phone.
Keeping the goals at the forefront of your mind will help you stay committed until you cross the finish line.
- Be realistic with your goals. When you begin the journey of setting short term financial goals, it can be easy to dream really big. While that is great, if you want to realistically instill a habit of saving, you need to be wise with your goals.
If you are hoping to save $500 for an upcoming road trip but that means that your family won’t get meals for the month, that might not be the best sacrifice. Instead, you might want to adjust your budget and spend the month eating cheaper meals (beans and rice, cans of tuna…).
- Write down your goals. There are a significant amount of studies that show that by simply writing down your goals you have a 60% better chance of completing that goal compared to someone that didn’t write it down. That’s a lot!
My partner and I always write out any financial goals that we have and post them on the fridge as a daily reminder. It is just that little extra bit of motivation and keeps us accountable to make that goal!
Setting short term financial goals is not only a wise decision, but it is one that your future self will thank you for. Whether you want to be able to pay for a vacation with cash, pay off some debt, or even put money away for an emergency fund, you won’t regret it.
When you set short term financial goals using the tips in this article, you will be able to take those baby steps into financial freedom.
So tell me… do you and your partner set short term financial goals? Which one are you working toward right now? Tell me in the comments so that I can root for you!