10 Examples of Short-term Financial Goals (And Why They’re Important)
We get it: though the concept is simple enough, being diligent with saving money is tougher than it sounds. With so many “wants” out there, it’s all too easy to spend your extra cash on non-essentials and leave little to nothing left over in your savings account. This can leave you feeling stressed out and uneasy about your financial situation.
However, you can make saving a much easier task by taking a simple step: setting yourself a goal. Studies show that people who set financial goals feel 83% better about their financial situation within one year. In contrast, it’s been reported that 34% of Americans (around 100 million people) have $0 in savings. This points to a huge group of people who could really benefit from setting a saving goal!
If you’re not already focused on a financial goal, we wanted to share some inspiration for some short-term saving goals you can pursue. A short-term financial goal is considered to be any goal that can reasonably be achieved in less than 5 years. While larger goals like a down payment on a home are important as well, they can seem very unattainable to someone who’s starting out with saving. Instead, if you first work towards a short-term goal, you’ll see that you can reach it, giving you the motivation to continue on to larger, longer-term goals.
1. A Vacation
Vacations are technically a luxury expense, but they’re also important to help you destress and decompress from your professional life. Taking time off work to relax can help reduce burnout and is a healthy part of a work-life balance.
If you’re motivated by the idea of a vacation, start thinking about a few places you want to go to that are within reach today. For example, if you live in Canada, it’ll likely be easier to save for a trip to Florida than it would be to go to the Maldives. By doing a quick online search for flight and accommodation options, you’ll figure out the average cost of a trip and can figure out a rough target to save towards. You might be on a tropical beach within a year!
2. A “fun” purchase
This type of end goal will be totally different between two people depending on their preferences, but operates using the same basic concept. That is, if you’ve got a “fun” goal mixed in with other more practical or “boring” goals, you’ll be more likely to reach all of them.
You can think of this saving goal as your reward for being diligent with your other goals. So, whether you want a new pair of shoes, a huge flat screen TV, a piece of jewelry or anything between - start saving for it. You’ll be less likely to fall off track and overspend when you know you’ve got one of your “wants” coming your way.
3. Emergency fund
This is an ultra important goal for everyone, no matter how they identify themselves. Financial emergencies happen - you just don’t know when you’ll face your next one. It’s in your best interest to be prepared.
The money in an emergency fund is meant to be used only when an unexpected expense comes up, like an emergency car repair or a sudden loss of income. It’s recommended that you aim to save 3 to 6 months of your income or expenses in an emergency fund, but that can seem like a daunting goal if you’re just starting out. Instead, aim for a smaller target, like $1000, that’s much easier to wrap your mind around. Once you reach that, you can set your sights higher and start working towards that 3 to 6 month target.
4. Starting a business
Making more money is something that appeals to most of us, so why not start saving to start a business of your own? This could be a business that you intend to run full-time, or it could be a side hustle that you run outside of a full-time job, devoting a relatively small number of hours to per week.
There are so many reasons to pursue this goal, especially if your full-time job doesn’t appeal to your personal interests. However, no matter the concept, businesses are expensive to run. It’s important to have a well-tended pool of money for your business to keep things running smoothly while you pay off any start-up costs involved in getting off the ground. Plus, things will almost always cost more than you think they’re going to, so much like you should have a personal emergency fund, you should budget for emergencies for the business itself too.
5. Investment fund
Investing your money is an essential step towards reaching financial freedom. Even if you’ve got tons of money saved, the amount you earn in interest on that money can’t outpace its loss of value from inflation. But, by investing some of your savings effectively, the returns you earn can outpace inflation and keep you ahead financially.
If you’ve already got an investment plan sorted out, think about auto-investing a set percentage of each paycheck you receive. If you don’t have a plan yet, or even know how you’d get started with investing, you can still get moving today by saving. Building a pool of savings to invest with in the future will give you time to do your research and figure out what your ideal portfolio should look like - when you’re ready, you can invest everything you’ve saved all at once.
6. Education
Further education can help your career prospects and teach you the skills you need to get to your next phase of life. Beyond that, learning is extremely enlightening and can even be fun if you’re focused on a subject you’re passionate about. However, it goes without saying that post-secondary schooling can be quite expensive depending on what you decide to pursue.
If you’re interested in going back to school (even just vaguely), start putting money aside for it today. If you do return to school, you’ll be happy you started saving. You may not be able to cover everything, but having even a few hundred to cover textbooks can be a huge help. If you eventually decide you don’t want to go back to school, that money can go towards the next worthy goal of yours instead.
7. Pet needs
If you have a pet, there’s no need to tell you how expensive they can be. Pets have so many important needs, particularly if you have a dog, and it’s essential to be prepared for them. If you don’t already, think about putting some money aside each month into a dedicated pet fund to help cover those costs, saving for their vet bills in particular. Pets inevitably need an increasing amount of veterinary care as they age, which may include regular prescriptions and appointments. Even if they’re young and healthy now, accidents happen - it helps to have money earmarked for their health needs.
If you don’t have a pet but are interested in getting one in the future, you can still start a pet fund today. The cost of getting the animal itself, plus all the items you’ll need to make them comfortable in your home, can add up quickly. You’ll thank your past self for putting money aside for your new family member’s needs.
8. Health fund
Your overall level of wellness is a critical element of how your life plays out. Whether it be through eating healthy, exercising, avoiding unhealthy habits or otherwise, it’s extremely important to invest in your physical and mental health.
While sometimes investing in your health translates to a time commitment, it’s often a financial commitment as well. Purchases like vitamins and supplements, appointments with specialists, prescription medications and more can run up a huge price tag. So, instead of wondering if a health and wellness-related purchase is “worth it”, save to be prepared so you don’t have to short-change yourself and your well-being.
9. Home upgrades
Whether you own your own property or you rent your home, there’s always something that can be done to improve your space. Feeling comfortable where you live will make you feel happier and more inspired on a daily basis.
If you own your home, the options are unlimited: you can think about making major changes like renovations and painting without getting anyone else’s approval. If you don’t own the place you live in and don’t want to sink money into property that doesn’t belong to you, there are still a ton of options for your space. This could include replacing old furniture, getting new art for the walls, updating your bedding and so on. However, it all takes money, so think about what changes you want to prioritize and start saving for them!
10. Holiday fund
Every year, each of us celebrates a number of special days with our family and friends, like the winter holidays, birthdays, and anniversaries. While these times can be some of the best of the year, they often come with a hefty price tag attached. Plus, despite the fact that these events happen at the same time each year, these expenses somehow feel like they’ve snuck up on you every time.
Instead, you can start a pool of savings that’ll go towards covering the costs of these kinds of days. Even just $10 each time you get paid can help make a big difference the next time you need some extra money for gifts, party supplies and more.