Are you looking to set short-term financial goals to takes steps towards improving your financial health?
Then you’ve come to the right place.
Getting your personal finances to a place where they become a source of empowerment instead of a source of stress is a tough but completely doable journey to embark on.
And one thing that makes it easier to start this financial improvement journey is focusing on smaller short-term goals to get the ball rolling.
But choosing which financial goals to start with can be overwhelming.
When I first started my personal finances journey, I was lost. I knew I wanted to “get better with money”, but I didn’t know where to start. So I tried to do too many things at once making it difficult to meet just one goal. I spread myself too slim.
I don’t want you to feel lost like I did.
Therefore, I created this post to help you figure out what short-term financial goals make sense to you, and more importantly, how to actually achieve those goals.
Let’s dive in.
What Are Short-Term Financial Goals?
Short-term financial goals are the stepping stones towards larger goals.
These short-term goals are the things you can work on now and accomplish in a short period of time. Short-term goals can help you build better money habits, create financial security, and put you on a path to long term financial success.
By accomplishing these short-term financial goals, you will fuel your motivation and build up the confidence you need to reach your long-term financial goals.
Let’s look at some short-term financial goals that you could set for yourself.
Short-term Financial Goal Examples to Get You Started
The list below is my recommendation of where to start if you are looking to set short-term financial goals to improve your financial well-being.
If I were starting all over on my financial journey, I would start from the beginning of this list and work my way down.
Track Your Spending
This may seem like an odd goal because you aren’t actually improving your finances.
But I genuinely believe the information you’ll get from this exercise is one of the most powerful first steps you can take in setting short-term financial goals. Especially, if you are just starting out and are not quite sure where all of your money is going.
Because if you don’t know where your money is going, it will be difficult to set and meet most, if not all of your financial goals.
Therefore I challenge you to commit to tracking your spending for a month or two.
Tracking your expenses removes the blindfold from your spending. It will reveal how well your spending aligns with your values and priorities.
Here are a few simple ways to start tracking your expenses:
- Use a budgeting app like Mint (free)
- Export Your Bank Statements to a Spreadsheet and Categorize each expense
- Keep an expense journal and record all of your expenses as they occur.
Create a Budget and Live by It
A budget is a valuable tool to improve your finances, especially if you are at the beginning of your journey.
And I truly believe that once you find the right budgeting method for you, it will not feel restrictive and you will start to feel in control of your finances. But it can take a little trial and error to find the right method.
I had to do a little trial and error myself when looking for a budgeting method that worked for me.
I know some people love spreadsheets, like my pal Jamie at MrJamieGriffin.com , who is a master of the budgeting spreadsheet. And he has some great YouTube videos on creating a budget spreadsheet if that is something you want to try.
Take some time and try out a few budgeting methods and see what works for you.
Related Post: Which Budgeting Method is Right For You
Start an Emergency Fund
An emergency fund is a fundamental aspect of good financial health. And in my opinion, adding money to an emergency fund comes before paying extra on your current debt.
Having an emergency fund provides an invaluable sense of financial security by preventing you from having to take on debt if any unforeseen circumstances pop up.
The rule of thumb for an emergency fund is to have 3-6 months of basic living expenses stashed away. Basic living expenses include all of your bills (including debt repayments) and the expenses you need to live, such as food and clothes.
Start by putting in however much money you can into your emergency fund, even if it’s only $100 a month. But do your best to make it a priority.
Related Post: Why I Didn’t Have An Emergency Fund Until I Was 39 (Don’t make this same mistake)
Create Sinking Funds For Upcoming Expenses and Wants
I freaking love sinking funds! They have been a game-changer for my finances.
Sinking funds are a way to put money aside each month to cover non-monthly upcoming expenses and saving goals.
Sinking funds Examples Include:
- Holiday Gifts or Donations
- Annual Insurance Policies
- Home Down Payment
- Home Repairs
- Car Repairs
- New to You Car
- Annual Subscription Fees
The beauty of the sinking funds is that they allow you to prepare for an upcoming expense instead of being surprised when the bill arrives. Just think of all of the stress you would avoid if you had a stash of cash available to pay all of your upcoming expenses.
Sinking funds also provide financial security because they prevent you from having to take on debt to cover an expense you didn’t plan for.
Another fun fact about sinking funds is that they make you feel like a money boss.
Recently, we set up a sinking fund to buy a van to convert into a campervan. The feeling of being able to accomplish our dream without taking on any debt was incredibly empowering.
I suggest starting with creating sinking funds for your upcoming needs first. These are the expenses that may cause you to go into debt if you are not prepared. You can save the wants such as vacation further down your financial journey.
Related Post: Sinking Funds: Why You Need Them and How to Get Started
Establish a Plan for Paying Down Debts
Are there debts in your life from credit cards or student loans that are impeding your ability to reach other financial goals?
Then creating and executing a plan to reduce your debt is a great way to increase your financial well-being.
There are several strategies for paying down debt that is recommended in the personal finance space, the most popular being the debt snowball and the debt avalanche methods.
The debt snowball method is where you pay off your smallest debt first while the debt avalanche method has you pay off the debt with the highest interest rate first.
Don’t stress out too much about which method to choose. Any step towards reducing debt that is holding you back is a good one.
Start Investing for Your Retirement
This can definitely be an overwhelming goal to undertake. But there actually are some great resources out there to get you started, even if you’re not an investing wiz.
Investing is key to creating a stable financial future, so it’s definitely a goal you’ll want to tackle at some point.
Start your investment journey by broadening your knowledge on the subject. My investing knowledge is at an Investing 101 level, but I feel very comfortable investing my money because of some helpful resources.
A great resource for me was J.L Collins’ book A Simple Path to Wealth. He wrote it with his college-age daughter in mind, so it is straightforward and easy to digest and understand.
With just a little investing knowledge, you can start to look into which retirement investment vehicles are available to you. Many of us have employer-sponsored retirement plans, which are great places to start.
Steps to Take to Help You Reach Your Financial Goals
Now that we’ve read about the short-term financial goals to set when you are working to become a money boss, it’s time to figure out what goals are right for you and create a plan to achieve them.
Think About Your Vision for the Future
Start with taking the time to think about how you want your life to look and feel in one year, five years, and 20 years.
I know these are short-term goals, so why are we talking about five and 20 years out?
It’s because our long-term vision will help shape our short-term goals. Remember, each short-term goal is a step towards your long-term vision of your life.
Spend some time thinking about what you want in your life and what is important to you: right now and in the future.
Do you want to be debt-free? Stop stressing about money? Own a house? Take a vacation? Retire before the traditional retirement age?
You’ll use your current and future vision to determine what financial goals to work on and what timeframe you want to achieve them within.
As you travel on your financial journey, come back and reexamine your vision regularly. Sometimes our visions change.
List Out All of Your Short-term Financial Goals
Make a list of all of the goals that can help you reach your vision of your future.
This list will include the goal and a timeframe for achieving that goal.
You won’t necessarily work towards all of your goals at once. But it helps to have a sense of all of the goals you want to accomplish.
Prioritize Your Financial Goals
The next step is to prioritize those goals.
The path you take is completely up to you. But here is a suggested path for you to get started:
Build Financial Habits
- Track your spending
- Create and use a budget
Build Financial Security
- Start an emergency fund
- Create sinking funds for upcoming needs (Annual bills, Car repairs, home repairs, etc)
- Pay down debt
- Start investing for retirement
Save for Your Wants
- Sinking funds for weddings, vacations, video game system, etc
Make Your Goals SMART Financial Goals
Now that you know what goals you are going after, make them SMART.
By creating SMART goals you are giving your goals the structure they need to be achieved.
A SMART goal is:
When creating a SMART goal, be clear on what you are trying to achieve and when you want to achieve it. At the same time, make sure it’s aligned with your vision and actually possible to achieve within your timeline.
Put a Plan into Action
Now, this may be the hardest part. But I know you got this.
You may be thinking, “How can I start achieving these goals if I don’t have any extra money left at the end of the month?”. Great question.
This is where following the order of goals listed above come into play.
By improving your money habits first like tracking your spending and sticking to a budget, you will likely identify expenses that don’t align with that vision you created for your future.
And once you identify these expenses, you can eliminate or reduce them. This will free up money to put towards your savings or debt repayment goals.
During this process, you will start to think about your money and spending habits differently. This is because you are thinking about how each expense affects your ability to achieve your vision. And that mindset shift will pave the way to meeting your financial goals.
If you need help creating a plan to reduce your expenses and start saving money, check out my post below on creating a savings focused Money Plan. It’s the process, I used to cut back on spending and start meeting my financial goals.
Review Your Progress Regularly with a Money Date
Regularly take time to have a money date with yourself or your partner.
A money date is intentionally setting aside time to spend with your finances. It’s time to look at the current status of your finances and ask yourself if they still align with your values. You can see what’s working and what’s not and make adjustments to work towards a healthy financial future.
Intentionally carving out time to review your finances will help you celebrate your small wins while staying committed to your financial goals.
You Got This
Short-term financial goals are a great way to both build a sturdy financial foundation and keep you moving towards your long-term goals.
The empowering feeling of achieving your short-term goals will fuel your motivation to work towards that bigger vision you have for your life.
Remember that you are on a financial journey. And by taking one intentional step at a time, you can get closer to achieving your dreams.