Short-Term Financial Goals

Establishing a financial goal can make it easier to stick to a budget and achieve financial independence. There are three different types of financial goals: short-term, mid-term, and long-term. Short-term goals can be achieved quickly and motivate you to set long-term goals that secure your financial future!

 Anyone can set and achieve financial goals if they commit to improving their personal finance habits. Keep reading to learn how to set and achieve financial goals for yourself! 

What Is a Short-Term Financial Goal?

A short-term goal is an objective you can meet within a year. Short-term goals do not require a lot of financial planning. Achieving short-term goals can make you realize how easy it is to successfully plan how to use your money. Common short-term goals people set for themselves include paying off debt, creating a budget plan, and starting an emergency fund. 

Paying Off Existing Debt

Debt repayment is a common short-term goal that many borrowers have. Being debt-free means you increase your monthly income and reduce your financial stress. Got a lot of debt to repay? You may see benefits without repaying every debt! Reducing the amount of debt you carry can improve your credit rating because credit debt counts for approximately 30% of a FICO score.

The most common forms of debt that consumers have in America include:

  • Credit card debt
  • Student loan debt  
  • Medical bills
  • Auto loans
  • Payday loans
  • Mortgages   

Creating a Budget Plan

Budgeting is essential because it ensures you spend your money wisely. However, many people struggle to get started. A great short-term financial goal is to set up a budget plan for yourself! Following a budget can help you save money, achieve goals, and improve your finances. 

Starting an Emergency Fund

An emergency fund is essential for everyone to have. In the event of a financial emergency, you can avoid paying money to borrow from a lender! An emergency fund is a reserve for unexpected expenses, such as car repairs, medical emergencies, and unplanned travel. Starting an emergency fund is a great short-term financial goal because it provides you with financial security!  

What Is a Mid-Term Financial Goal?

A mid-term financial goal takes longer to achieve than a short-term goal but is not as time-consuming as a long-term one. Mid-term goals take between six months to a couple of years to complete. Common mid-term goals include getting a new car, getting a degree or certification, and saving for a wedding.  

Buying a New Car

Buying a new car is a common mid-term financial goal that people have. Vehicles are essential in America because public transportation is unreliable everywhere. You likely need one to get to work quickly, run errands, and transport family members. 

Most people rely on auto loans to finance a new vehicle purchase, but you may still benefit from saving up for a down payment. While you can avoid using a down payment, keep in mind that your monthly payments will be much higher. 

And if you have a bad credit score, you may get high interest rate offers. It’s possible to use a credit card for a car down payment, but this is a costly option. Interest charges will add up to a significant amount if you carry a high balance. However, setting a mid-term financial goal can motivate you to improve your credit rating and save for a brand-new car!

Completing a Degree or Certification Program

Investing in yourself is a worthy goal because you increase your career and financial opportunities! Completing a degree or certification program takes time, so it is often classified as a mid-term financial goal. The time it takes to get a degree or certification depends on your student status (part-time or full-time) and the course length.  

Saving for a Wedding

Weddings are often lavish events, and most people end up spending an average of $28,000 for the ceremony and reception! Saving up for a wedding is a common goal for people. However, some people opt to use personal loans in addition to savings. Although there are wedding ring financing options, you will end up paying a decent amount of interest. 

When setting up a financial goal for wedding costs, also consider the type of venue you want and how many people you intend to invite. The venue is always the most costly factor, averaging about $10,500. When choosing a wedding date, take into account how long it will take to save up enough money for down payments.

What Is a Long-Term Financial Goal? 

A long-term financial goal takes several years to accomplish. A long-term goal is meant to help you secure your financial future and give your work purpose. A few examples of long-term financial goals you should consider include saving for retirement, a down payment on a property, or your child’s college education.

Down Payment on a House

A down payment lowers the cost of buying a real estate property. The more you save up for a down payment, the less you will pay monthly on a mortgage. You may think you need to save 20% or more of the purchase price, but this is not always true.

The amount you should have available for a down payment depends on the type of mortgage loan you want to use and the financial institution you work with. For example, the minimum down payment for an FHA loan is only 3.5% for borrowers with FICO scores over 580 points. Suppose you want to buy a $200,000 condo with an FHA loan. In that case, you only need to save $7,000 if your credit score exceeds 580, and you’re eligible!

Saving for Retirement

Retirement age seems like a lifetime away, but it will inevitably arrive. Saving for retirement early can help you afford a comfortable standard of living. There are different retirement accounts to choose from. The best one for you depends on your financial goals and personal job situation.

These are some of the most popular retirement accounts available:

  • 401(k): Employers offer employees this type of retirement plan. Employers match up to a specific portion of employee contributions. As of 2023, the IRS allows income tax deferment of up to $22,500 for individuals under 50 years old and $30,000 for individuals over 50.
  • Solo 401(k): This type of plan is also known as a one-participant 401(k) plan. Individual business owners without workers can be eligible for a solo 401(k) plan. As of 2023, the IRS allows contributions up to $66,000.  
  • 403(b): You may be eligible for a 403(b) if you work for a nonprofit or tax-exempt organization. Since 2023, consumers under 50 can contribute up to $22,500, while those over 50 can contribute up to $30,000. Earnings are tax-free until the account holder withdraws funds.
  • 457(b): State and local governments offer 457(b) plans. Eligible individuals under 50 years of age can contribute up to $22,500 and up to $30,000 if over 50 years. Withdrawals before the age of 59 1/2 are penalty free!
  • IRA: An individual retirement account (IRA) is available to workers with earned income. Similar to a 401(k) plan, you can receive a tax deduction on deposits. The contribution limit is $6,500 as of 2023, and $7,500 for individuals over the age of 50. You must start taking distributions after turning 73 years of age.  
  • Roth IRA: A Roth IRA is similar to an IRA, but you must pay taxes on the amount you contribute, although the money grows tax-free. As of 2023, account holders under 50 can contribute up to $6,500 and $7,500 if older.

Saving for Your Child’s College Education

Getting an education is costly, but it is worth every penny! The price of annual tuition increases every year, but you can provide a sizable lump sum for your child’s higher education if you start saving now! Parents can begin setting money aside at any time. According to the College Board, a four-year public college will cost roughly $10,560 annually. If you want to fully fund your child’s college education, you should have approximately $42,240 in a savings account.

What Are the Different Types of Savings Accounts?

One of the most common short-term financial goals people set for themselves is establishing a savings account. A savings account, or emergency fund, is one of the best ways to ensure financial success during unpredictable life events.

But before you start saving money, you need to determine what type of account to open. There are different savings account options, and the best one for you depends on your financial goals and needs.

  • Traditional Savings Account: Most credit unions and banks allow consumers to open a savings account for free. Account holders earn interest, but rates may be lower than other account options. Most financial institutions only allow up to six monthly withdrawals. Fees vary, so check with your financial intuition.
  • High-Yield Savings Account: High-yield accounts usually have a higher APY than traditional savings accounts. Many high-yield accounts are FDIC or NCUA insured, just like traditional accounts, so your money is safe up to a specific amount.
  • Money Market Account: A money market account is a savings account that offers checking account features. Account holders can earn interest with MMAs while still being able to access their money. However, many financial institutions charge monthly fees and require a high minimum deposit.
  • CD Account: A certificate of deposit (CD) is a savings account that allows consumers to earn competitive rates if they do not require access to their money. Money kept in a CD cannot be withdrawn for a specified period of time. The terms typically range from 30 days to five years.
  • Cash Management Account: A cash management account is excellent for people that want access to cash while they determine how to invest in brokerage or retirement accounts. Some financial institutions that offer cash management accounts offer higher-than-normal FDIC coverage limits.

How To Build a Savings Account in 5 Steps

In order to start saving money in a savings account, you first need to determine how much you earn and spend within a month. Once you know how much extra cash you have available, you can plan how much to set aside monthly in a savings account.

Step 1: Calculate Your Monthly Income

To calculate your monthly income, take a look at your bank statements or paycheck stubs. Ensure you use your after-tax income, as that is the actual amount you have available to spend. You will need to calculate your average monthly income if you do not earn the same amount every month. 

Financial experts advise adding up your income for the past six months to get an accurate estimate. Once you add up the total monthly income for the past six months, divide the total by six to get your average monthly income. 

Step 2: Calculate Your Monthly Expenses

Calculating your monthly expenses is more challenging since you have a mix of fixed and variable expenses. Take a look at your bank and credit card statements to calculate how much you spend every month. Knowing where your money goes can provide a clear picture of your spending habits and what bills you can cut or reduce.  

Step 3: Cut Monthly Costs

Once you know how much you spend every month, you may realize you are losing money on certain expenses. Suppose you have ad-free monthly subscriptions for HBO Max ($14.99), Netflix ($15.49), and Disney Plus bundled with Hulu ($19.99). Within one month, you will have spent $50.47! You don’t need annual financial planning with your financial advisor to know that you are losing out on hundreds of dollars annually! Determine which monthly bills you can cut to save money and increase your income. 

Step 4: Create a Budget

Creating a budget helps you manage your money, so you are able to save and spend on meaningful things. Budgeting can help you with debt reduction, income increase, goal achievement, and much more. Once you know your monthly income and expenses amount, you can choose a budget plan based on how you want to use your excess income. 

These are just a few examples of budget methods you can try:

  • 50/30/20 Rule: The 50/30/20 rule is one of the most straightforward budget plans. This budget rule dictates that you spend 50% of your money on needs, 30% on wants, and 20% on savings. This budget plan is adjustable, so you can change how much you spend per category. 
  • Envelope System: The envelope budget method forces you to use cash so tracking your spending is easier. Place a specific amount of cash in envelopes labeled for specific financial categories, such as groceries. Once the money runs out in each envelope, you must wait until next month to spend in that category.
  • The ‘No’ Budget: This method helps you save a lot of money but requires discipline. Essentially, it would help if you said ‘No’ to unnecessary expenses. Want to buy new shoes? No. Want Starbucks instead of making coffee at home? Nope.  
  • Pay-Yourself-First Budget: The budget plan is ideal for consumers that want to prioritize debt repayment and building an emergency fund. Determine how much you want to set aside monthly for existing debt or savings and spend the rest of your income how you like.
  • Zero-Based Budget: Every dollar you have must go towards a financial category, so no money goes unused. If you have money left over in your bank account after paying bills, you must decide how to spend it. You can use the extra money to invest, save, or even take up a new hobby! 

Step 5: Open a Savings Account

You can open a savings account once you reorganize your finances. Almost anyone can open a bank account! You can start the process online or in person at a local branch. You may be able to open a savings account on the same day! 

Most financial institutions will require basic information, a Social Security number, and a government-issued photo ID. You may have to provide a minimum opening deposit amount. Still, some banks and credit unions do not require any money upfront. 

How Can I Track My Monthly Spending?

Tracking all of your monthly expenses can make it easier to limit daily purchases and save money. Check out some ways to track your spending below. 

Expense Tracker Apps

There are several apps available to track your spending. Mint is one of the best free expense tracker apps. Mint allows users to track spending, set bill payment reminders, and monitor their credit scores. If you prefer a hands-on approach like the envelope budgeting method, use the Goodbudget app. If you have a partner, you can use Honeydue because it helps couples manage money together.   

Monthly Calendar

You can use a traditional budget calendar to keep track of your expenses. However, you do not have to spend money to track your expenses. You can find free printable calendars online that can help you track your spending. You can choose between daily, weekly, or monthly budgeting. 

Signing Up for Mobile Alerts

Many financial companies offer alerts that send you the amount and location of every purchase you make. Forgot how much you spent on food this week? You can check your text messages to see how much your debit or credit card was charged.


Average Wedding Cost│Business Insider

FHA Loan Requirements│FHA

Retirement Accounts You Should Consider│U.S. News & World Report

Cost of your child’s college education│CNBC