Short-Term Financial Goals
Short-term financial goals can help you stick to good saving and spending habits. Whether you want to pay off credit card debt or buy a car, it’s important to have a strategy to achieve your goals.
Let’s dive deeper into what short-term financial goals are, the benefits of these goals, and how you can set them.
What are short-term financial goals?
A short-term financial goal is a type of goal you would like to achieve within the next year or few years. This might be saving up for a car, paying off debt, going on a trip, or buying a new home.
Whatever it is, make sure you have a plan to help you reach your goal. With a clear and easy-to-follow strategy, you have a better chance of achieving the financial goals you've set for yourself.
Why should I set short-term financial goals?
There are several reasons why you should set short-term financial goals. These types of goals can motivate you to spend less and save more. They may also make it easier for you to manage your money wisely and reduce financial stress.
What is the SMART financial goal strategy?
There are many different ways to achieve financial goals, but one popular method is the SMART goal strategy. This stands for Specific, Measurable, Achievable, Relevant, and Timely. Here's what each component means:
- Specific: Your goal should be specific and clear.
- Measurable: You should have a way to measure your progress so you can monitor how close you are to achieving your goal.
- Achievable: Your financial goal should be something you can actually achieve.
- Relevant: Make sure your goal is relevant to your life.
- Timely: Set yourself a timeline for achieving the goal to help keep you motivated and on track.
Short-term vs. mid-term vs. long-term financial goals
There are three different kinds of goals you might have: short-term, mid-term, and long-term. Short-term goals are things you want to do within the next year or few years, like saving up for a new car or a vacation. Mid-term goals are things you want to do over the next few years to a decade, like saving up for your wedding. Long-term goals are goals you may want to achieve in the long term, like saving up for retirement.
Examples of short-term financial goals
Here are a few types of short-term financial goals you may want to consider:
Create an emergency fund
An emergency fund can help you cover an unexpected expense, such as a car repair or a leaky roof. If possible, try to save three to six months’ worth of expenses and put the money in a high-yield savings account.
Pay off credit card debt
The sooner you pay off your credit card debt, the more you’ll save on interest charges. Paying it off quickly can lead to thousands upon thousands of dollars in savings. Achieving this short-term financial goal may also significantly free up your monthly cash flow.
Pay off student loans
If you have student loans, paying them off can help you save a lot of money. This is particularly true if these loans come with high interest rates. Getting rid of your student loans can also take a large financial burden off your plate.
Save for a down payment on a house
To take out a mortgage, you’ll likely need a down payment. If you currently rent and would like to become a homeowner someday, it may be a good idea to save for a down payment. Your down payment could be anywhere from 3.5% to 20% of your anticipated home price.
How to set short-term financial goals
If you’d like to set short-term financial goals, follow these steps:
1. Determine your goals
Think about what types of goals you’d like to achieve in the near future. Maybe you hope to buy a house, remodel your kitchen, or take a trip across the country. Jot down these financial goals and keep them in mind as you develop your goal strategy.
2. Use the SMART goal strategy
SMART stands for Specific, Measurable, Achievable, Relevant, and Timely. Before you set a short-term financial goal, make sure it meets each of these five attributes. Your goal should include a timeline and be clearly defined, easy to measure, attainable, and within reach.
3. Create a budget
A budget is a plan based on your income and expenses for how you’ll spend your money. Create a budget that works for your financial situation and short-term goals. The pay-yourself-first budget, for example, involves paying yourself first instead of covering your bills. Another type of budget is the zero-sum budget, which requires you to choose a “job” for every dollar of your monthly after-tax income.
4. Stick to your financial goal plan and adjust as needed
Once you have created a plan to achieve your short-term financial goals, stick to it. You can change your plan at any time. In fact, there’s a good chance you’ll adjust your financial goal strategy as time goes on and you have different needs and priorities.
Which short-term financial goals are right for me?
The right short-term financial goals for you depend on your unique financial situation and needs. For instance, if you have some credit card debt, one of your goals may be paying off this debt. And if you don’t have any money saved up for unexpected expenses, you may want to build an emergency fund. Short-term financial goals can be different for everyone, and your goals may not be the same as someone else’s.
Meet your short-term financial goals with an Advance America loan
If you need to achieve a short-term financial goal immediately, Advance America can help. From payday loans and installment loans to title loans and lines of credit, we offer several financial products that can help you cover an expense right away. Once you fill out an application for our loans online or in-store, you may receive an instant decision and get the funds in your bank account the same day you apply.