5 Ways To Write Short-Term Financial Goals
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While long-term financial goals give us a dream to work toward, our short-term financial goals keep our feet on the ground. These are actionable goals that we can achieve within roughly one to three years. Short-term financial goals can either stand on their own or be the steps we need to take to reach a much larger financial goal.
The goals you set for the short term are equally as important as the ones you set for the long term. Think of them as tangible road markers that help propel you forward and onward.
Short-term financial goals typically differ from person to person. But if you have no idea where to start, may we suggest going the SMART way?
Setting SMART Goals
Goal setting can sometimes be complex, especially if you have a million thoughts and ideas in your head and don't know where to begin. That's why, if you're ever stuck in a rut, be smart and use SMART!
SMART stands for Specific, Measurable, Attainable, Relevant, and Time-bound. You can use this technique to help you identify and achieve your goals. So, let's dive a little deeper into each one!
Specific: No matter if you’re saving for a secondhand car or to pay off credit card debt, your goal needs to be as clear as day.
Measurable: In terms of your finances, how much is your goal? How much money do you need to put aside? Maybe you have $4,012 in credit card debt—that would be your measurable goal.
Attainable: When it comes to goal setting, ensure that what you’re writing is realistic. You don’t want to try to pay off that credit card debt next month! Establish strategies to reach your goal, such as working a few hours on the weekends to bring in more money.
Relevant: See to it that your goals are something you’re truly working for and not just something you’re doing to keep up with the trends or to not get left behind with your friend group. So, ask yourself: do you really need to put money aside for a trip that might just break your bank account?
Time-bound: Know your deadlines! This will help you stay accountable, so you’re not just setting goals for the sake of it.
Your short-term financial goals can become clearer and easier to achieve if you use the SMART approach!
5 SMART Short-Term Financial Goals To Get You Started
Now that you know the SMART way to set your short-term financial goals, it’s time to write them! Need a boost of inspiration? We’ve got you! Below are some ideas to get you started:
Establish An Emergency Fund
Wise are those who set aside funds for that proverbial "rainy day." An emergency fund worth 3 to 6 months' worth of your current income will protect you from the stress and anxiety of having nothing for unexpected circumstances like costly medical bills or auto repairs.
Setting a goal like this develops good saving habits and can help you prepare for anything. However, if saving for three months' worth of expenses seems ambitious, break it down into a more manageable amount and adjust your goal when your income or circumstances change.
An example of a SMART goal with this objective in mind would be to save $75 per month just for your emergency expenses. Then, add at least $2,700 into the account over the next three years.
2. Create A Monthly Budget
Make a monthly spending plan for yourself. Determine your financial objectives first, and choose the budgeting strategy that suits you best. A pen and paper, the envelope technique, a whiteboard, a spreadsheet, or any app—some of which are free—can all be used to create a budget.
For our SMART goal example, you can try the 50-30-20 budgeting system for an entire year. First, create a spreadsheet with your fixed and variable expenses. Then, divide the costs into debt, wants, needs, and necessities, and allocate your monthly income using the 50-30-20 technique. Finally, analyze your spending and payments once a month to determine if you're on track and spot any areas where you can make savings.
3. Discover Financial Literacy
Spend some time making a financial planning worksheet for yourself or researching personal finance. Understanding debt, credit, savings, insurance, and retirement, for instance, are all components of financial literacy.
Seek the aid of a financial planner or financial adviser if you need it!
Turning this into a SMART goal, you can start small by reading a book like "The Simplest Path to Wealth" in the next few weeks. Then, put your learning from this book into action by changing at least one thing about your financial habits.
4. Pay Off One Debt At A Time
Take it one step at a time. Take it one debt at a time! But what should be settled first?
There are two typical methods for paying off debt: The Snowball Method suggests paying off the smallest debt first so you can track your progress. On the other hand, you can also do the Avalanche Method, where you pay off your debts in order of greatest interest rate first. This strategy can help you save money by eliminating the compound interest that builds up while you pay down your debt.
An example of a SMART objective with this in mind would be putting $200 toward reducing your monthly credit card debt.
5. Cut Your Spending
Where's your money going? Knowing the answer to this question will help you understand the ins and outs of your financial situation. Then, review your priorities and cut back on spending if you find that you are going over budget in one or more categories.
Find alternatives! When shopping, support local businesses instead. Just make sure that your spending aligns with your income. Make sure to review your spending if your income has decreased due to a layoff, furlough, or change in salary.
Consider inflation as well. You won't be able to spend your money as efficiently as you did the year before if gas, energy rates, rent, or food prices are rising.
The SMART example for this one is to spend no more than $30 a week on dining out. That’ll save you at least $100 a month—money you can use toward paying down your college loans.
Short-Term Goals, Long-Term Success
Your short-term goals set you up for long-term financial success! While finances can sometimes be overwhelming to navigate, creating and working toward specific long-term and short-term goals will help you stay focused and feel accomplished when you achieve your goals now and in the future.
For more insightful and inspirational articles, check out WithYou’s blog!
This article was written by: Bash Sarmiento
