The most worthwhile things in life take time, effort, and discipline. Whether you’re saving up to buy your first car, home, or fund your upcoming nuptials — setting short-term financial goals is key to reaching your long-term wealth objectives.


Should I set short-term financial goals?

It doesn’t matter if you have $10 in your bank account or $10,000. Everyone — regardless of net worth or age — can benefit from short-term financial planning.


Chances are your present self has some lofty hopes and dreams for the future you. These might include:

  • Paying for college
  • Buying a car
  • Buying a house
  • Getting married
  • Starting a family


Most, if not all, will require a hefty amount of resources before they become reality. Long-term financial plans typically encompass short-term financial goals, which is why it’s important to identify what they are so you can set reasonable expectations to reach them.


4 steps for short-term financial planning success

If you have any real desire to reach those long-term financial milestones, you’ll need a solid, short-term strategy in place to keep you on track. But, as Desirae Odjick of Half Banked points out, your short-term financial planning strategy needs to be realistic and sustainable: “Figuring out how to balance them and not give up everything I liked at the same time has been a process, and at the beginning, I way overcorrected and tried to achieve my goals by brute force and radical frugality. Let’s just say it didn’t last, and it wasn’t a solid long-term strategy.”


Here are some steps you can take today, to make sure you’re working toward your financial goals in a realistic, sustainable way. 


1. List out your short-term goals

Start by thinking about the next five years and what you’d like to accomplish. Maybe you want to take your dream all-inclusive vacation to Fiji. Or add a four-legged member to your family. Or swap out your old furniture with high-quality pieces from your favorite custom shop.


Whatever your short-term financial goals might include — don’t shy away from admitting them to yourself and committing them to paper. The more specific and complete your list is, the more clear your overall picture will become. And when you write down every single one of your goals, you’ll be in a better position to work toward all of them — not just one or two.


2. Set a savings timeline and budget for each goal

On a separate piece of paper, list out the next 5 years: 2019, 2020, 2021, 2022, 2023. Take the goals you identified earlier and assign each one to a year. If that trip to Fiji is going to happen as luxuriously as you want it to, for example, you might think about putting it further out on your timeline.


Next, you’ll want to look into how much each of your short-term financial goals will cost. Do your due diligence on this one, because the more accurate your projected costs are, the more precise your actual saved amount will be. Map out how much you need to set aside each month in order to reach your goals, and work that into your personal budget. If you think your trip will cost $8,000 and you want to go on it in five years — take the number of months (60) and divide it by the projected cost ($8,000) to know how much you need to save each month ($133.33). To make things even easier, you can download this free savings calculator.


If you don’t have a personal budget and aren’t sure where you start — there are plenty of free budgeting programs available online to get you moving in the right direction.


3. Start earning interest

Just because money doesn’t grow on trees, doesn’t mean you can’t grow the money you already have. If you’re serious about reaching your short-term financial goals, you will need to earn interest on the money you’re saving.


Because these are short-term goals, the stock market isn’t your best option in this scenario. Instead, consider opening a high-interest savings account for your short-term financial planning needs. Look for savings accounts at banks or financial institutions known for higher-than-average interest rates, advanced technology and exceptional customer service.

The sooner you put your money into a high-interest account, the better off you’ll be.


4. Give yourself a break

You’ve identified your short-term goals, created a timeline, and calculated how much money you need to save each month to reach them. Your strategy is mapped out before you, and as exciting as it is, you can’t help but feel overwhelmed by the numbers.


Depending on your income and cost-of-living expenses — it may not be possible for you to reach all of your goals. At least not right now. To ease your stress level and make saving for your goals more manageable, consider the following:

  • Give yourself some breathing room and adjust your timeline. Maybe your furniture has another year or two of life left in it. Perhaps your dream kitchen makeover can wait another few years. If your goals are important to you and worth achieving, putting them off a little while longer won’t stop you from reaching them.
  • Determine ways to lower the cost of each goal. Look into booking a VRBO for your vacation and getting day passes to the resort. Find discount sites or stores for your home remodeling projects. Adopt your family dog instead of buying from a breeder. When you adjust the projected cost of each goal, even by small amounts, saving for them will become easier and less daunting.


Preparing for the future

If you have outstanding credit card debt, unpaid medical bills, or late payments hanging around — make sure to get them under control before going after new short-term financial goals.


You might consider taking out a personal loan to help wipe out high interest rates on your current debt, or make it part of your monthly budget to eliminate the debt on your own.


When your entire financial life is in order, you’ll be able to better prioritize your goals and achieve them.

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