Whether someone wants to pay off debt, save for a vacation, or build an emergency fund, setting short-term financial goals can be a helpful tool when evaluating finances.
Short-term financial goals typically focus on immediate needs or goals, often within a year. Long-term financial goals involve planning further in the future, like retirement or buying a home, and normally require extended periods of saving and investment.
In this article, learn about short-term financial goals, from factors to keep in mind when setting them and potential ways they can help people manage their finances.
Depending on an individual’s goals, someone can set many different types of short-term financial goals. Here are some common examples:
As approximately 72% of Americans report feeling financially insecure,1 building an emergency fund can be an important short-term financial goal.
An emergency fund may provide security when unexpected expenses arise, such as medical bills, car repairs, or a job loss. By setting up regular contributions to an emergency fund, individuals can work to avoid going into debt or tapping into long-term savings during emergencies.
While setting up an emergency fund can be a short-term goal, maintaining it and growing emergency savings can be a longer-term goal as well.
Setting aside funds for a vacation or an event (think honeymoons or weddings) may help people enjoy memorable experiences and possibly reduce financial stress.
By treating vacation or event planning as a short-term financial goal, individuals can balance enjoying life's special moments and maintaining stability, ensuring these occasions don’t compromise their potential financial well-being.
Whether buying furniture, a new laptop, or a major appliance, having a financial plan in place is essential — and that may start with setting a short-term financial goal. This entails saving for the amount due and exploring ways to reduce expenses without sacrificing quality or value.
Setting a short-term financial goal to fund the cost of a large purchase can help individuals make informed decisions, avoid possible debt, and ensure that the purchase aligns with their overall financial objectives.
Here are some potential benefits to short-term financial planning:
Ready to set short-term financial goals? Consider these factors before getting started:
Setting a personal budget can help meet short-term financial goals. Here’s an example of steps someone could take when creating a budget for a short-term goal:
When it comes to short-term money goals, using savings apps or digital wallets to set up automatic contributions may help people stay on track. These apps typically allow individuals to schedule regular transfers from their checking account to their savings account. Some may even provide features like goal tracking and spending analysis.
Being held accountable by a friend or family member may also be valuable. Sharing financial goals with a trusted person who can check on progress and offer encouragement may help someone stay committed to their goals.
It may be helpful to regularly review progress. This may help people stay on track and achieve their goals despite changing circumstances. When someone routinely assesses their short-term goals and budget, they may be able to better plan and make necessary adjustments.
Setting short-term financial goals can be a powerful tool. Whether it's building an emergency fund, planning a dream vacation, or making a significant purchase, this strategy can offer flexibility and tangible progress.
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