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Some short term financial goals are the end unto themselves. Others are milestones on a longer path. This post will focus on short-term financial goals, specifically, for taking action quickly for a stronger financial future.
What's In This Post
Where to start?
What is the life you are meant to live? Your best life? What’s your gift to share with the world? Those are the questions that put you in the right direction. Next, comes setting financial goals to help you implement that direction in the modern world.
Remember, money isn’t the goal. Money is the tool to reach your goals. It is your tool to get a lot of things done. That may be buy a house, take a vacation, adopt a baby, or found a school in an impoverished nation. Financial goals make these things possible.
Two types of short-term financial goals
The first type is a goal that doesn’t carry forward. It’s the end unto itself. For example, you may want to save $1,000 for plane tickets to a family wedding. When that’s done it’s done. Great short term goal, all unto itself.
But another type of short term financial goal is a stepping stone. It may be saving $1,000 to start an investment account. And that $1,000 is the first step towards your long term financial goal of building a million dollar retirement plan. In this way, you’ve taken immediate, manageable action to move towards a bigger, longer term aim.
It’s good to have a mix of these types of goals. Short term wins for various things you’re trying to accomplish in your present life. And others, short term, intentional stepping stones towards your intermediate and long term financial planning and life goals.
Short term financial goals examples
Here are a few examples of short term financial goals. These will hopefully spark some ideas for where you’d like to get started.
Using these lists for ideas relevant to you, make a list of your goals for the year ahead. Then prioritize exactly which steps you’ll take this week, next month, and so on.
Lay out a roadmap for how the goals link together (what comes before what) or which ones you want to do first. This way you’ll have not only a list of goals, but a plan of action (first step, second step) for accomplishing them. A lot of the examples of short term goals below don’t need to be done in any particular order. Many can be started (or even finished!) today.
1. Know your numbers
The first step before changing anything about your finances is knowing where you’re at. These goals are all about collecting and organizing information into a system that you can build upon with your long term financial goals.
- List out your debts, including credit card debt, loans, mortgages, medical bills, anything you owe
- Identify your Magic Monthly Number (my monthly cash flow number for the dollars left after your monthly fixed expenses are paid- see how I calculate this exactly using the Magic Monthly Number workbook in the Shop)
- Record your current credit scores with all three bureaus
- Check your credit report for errors with all three bureaus
- List out your irregular (less often than monthly) expenses throughout the year ahead (e.g. quarterly water bill, annual tax payment, annual plane tickets to see family, Christmas shopping, etc.)
- Write down any investment/retirement accounts you own in one place, along with online account lookup info and current balances
- List out all credit cards you hold, along with their interest rate, cash back benefit info, and whether they carry a balance currently (would also be on your list of debt, if so)
2. Financial literacy
Knowledge is power. And financial knowledge is money power. There are lots of great financial literacy achievements that make great short term financial goals.
- Read an impactful personal finance book (personal fav: Suze’s Young Fab Broke book), or two (Credit Secrets) or three (Retire Before Mom and Dad)
- Find a personal finance podcast for inspiration (try The Money Nerds)
- Study what goes into calculating your credit scores and why they matter
- Study different types of investment accounts, including general investing, retirement, and education savings accounts
- Learn how to calculate an amortization schedule for a loan (personal loans, student loans, car loans) and particularly for a mortgage. Study the impact of different interest rates and loan lengths
- Research different options for savings accounts and decide if your savings needs to move to earn more interest
- Get educated on different budget methods and think about what might work for you. Pick one to try first. (Be sure to check out my burn rate budget approach!)
- Read up on life insurance, disability insurance, and long term care insurance. List questions you have for further research, or talk to a financial advisor. Parents, do not delay on term life insurance!
3. Vision
Spend some time brainstorming and dreaming about where you see yourself, 1, 5, and 10 years from now. This is very powerful to point your compass in the right direction. A great short term financial goal is to work some steps to visit this purpose.
- List as many things as you can think of that you are grateful for in your life today
- Describe where you see yourself in 1, 5, and 10 years
- List out what you’d like to have more of in your life (everything from deeper friendships to more time on vacation, doesn’t have to seem to directly connect to money)
- List out what you’d like to have less of in your life (everything from less illness to less commute time, again doesn’t have to directly relate to money)
- Think of times in your life when you felt very content and try to identify some characteristics of your life that helped you feel that way
- Identify your purpose, something deep down you feel meant or compelled to do but haven’t pursued yet
4. Quick-start action goals
Many financial goals are very specific and may take years to see through. However, even if you don’t have a specific long term direction, take action to ensure you’re moving in a direction that keeps you open and flexible to the opportunities or challenges that might lie ahead. Also, maybe you don’t have the patience to get through all the soul searching, data crunching, and planning listed above, but you are motivated to manage your money better NOW no matter what the purpose. Use specific short term goal examples like the ones below to give you some quick action progress towards a stronger financial position in your future, no matter what it brings.
- Save money for emergencies. If you have $0 saved for an emergency fund, aim to save $1,000. When you have $1,000, aim for $5,000. If you have $5,000, aim for $10,000. Push yourself to grow your emergency fund.
- Set a monthly savings target for even greater savings and automate it
- Determine an additional amount to pay towards your smallest debt balance and automate it
- Commit to a monthly and/or weekly spending limit and stick to it
- Do a no-spend month to kick start some savings and get in touch with your wants vs needs
- Learn to cook to slice your grocery & takeout bills in half or more (this video is kinda fun to start thinking about the skills to be a pro in your own kitchen)
Examples of short term financial goals from my life
In my own life, here are several short term financial goals I have had over the years. In early adult life, pretty much any financial goal was short term because I didn’t have a specific plan or more grand life vision yet. I just knew saving and avoiding debt were key to have flexibility in the future. Life changed a lot year to year, from college, to grad school, to marriage, to first baby, first ‘real’ salary job, etc.
My short term financial goals in college
- Responsibly use (i.e., pay off in full every month) a student credit card to build credit history
- Qualify for a cash back credit card (these were still rare back then!)
My short term financial goals in grad school
- Afford to live on graduate assistant stipend without debt (~ $1,400 per month pay)
- Afford my own apartment for first time without roommates during Ph.D.
- Open high yield online savings account (5% interest back then!)
- Take trip to New Zealand to be part of my Aussie friend’s beautiful wedding!
- Buy (i.e. finance) my first car upon graduation (RIP 1993 Honda that got me through to this point)
My short term financial goals during first few years of marriage
- Save down payment for house
- Save for honeymoon cruise we took 8 months after our wedding
- Pay off personal loan we acquired during job transitions, moving, etc.
- Pay off my car (paid off $9,000 loan in two years)
- Start and fund Roth IRA $100 per month (since my postdoctoral employment didn’t have retirement benefits in first few years)
- Maintain habit of at least $100 per month to savings, plus anything extra we could (0 yrs married: $500 saved, 1 yr married: $1,000 saved, 2 yrs married: $10,000 saved) *This priority to always save, in retrospect, was critical to prevent us from trouble when a couple years later we spent most of our savings on a substantial down payment to buy a house in a much higher cost of living area of the country, and only a few months later pipes froze at our rental property (our first house) resulting in thousands of dollars in remodeling costs, above what was covered by insurance. Since we were also paying for our first year of childcare at $300 per week, this combination of events could have sent us into debt fast. An emergency fund is critical!
In a nutshell, my short term financial goals were always to save money habitually even when there was barely anything to work with. And pay off debt as fast and strategically as possible. You can see there is a mix of these types of financial goals, but also fun life stuff. It was during these poorest years that I actually left the country! A once in a lifetime trip to New Zealand and a Caribbean cruise. Plus, we realized not only becoming homeowners, but also my dream of owning rental property for a long term investment.
My short term goals today
My present day short term goals are designed around transitioning to working for myself in 2021. Therefore, they are targeted around absorbing more financial risk. In addition, we want to make some steps to strengthen our long term investment game.
- Maintain minimum emergency fund of $30,000 (higher than previous minimum to prepare for higher financial risk entrepreneurial life)
- Diversify income away from salaried jobs alone, to include more passive and side hustle streams
- Learn about types of investment funds (e.g. mutual funds, index funds, exchange traded funds, etc.) for us and the kids
Take home points for short term goals
As you can see, there is always something on which to make progress. Short term goals are small attainable action items to improve your finances. They are also often smaller stepping stones along a path to reach financial long term goals you have. Make sure your goals include a mix of both of these types.
Every journey starts with a first step!