Short term goals are characterized by a short time to achieve compared to other types of goals
When you create your financial plan, you have to set your goal either short-term, medium-term or long-term. Setting a plan to support your goals provides you with a guarantee for a good financial future.
How you can determine short-term goals and build a supportive financial plan?
Identify your financial goals
Figure out what you want to achieve most in your life. Any money you earn can easily be spent instead of being saved or earmarked for an important goal.
Estimate the amount of money you’ll need to accumulate to reach each goal.
Prioritize each goal
How important is each goal? Should your first priority be to save and invest for your retirement? This means that before anything else, a percentage of your salary is invested for retirement plan. Only after that occurs does additional money get earmarked for other financial goals.
Establish a time horizon for each short-term goal
The time period for short-term goals is from one to two year.
Assess your finances and eliminate credit card debt
Take a good look at your financial situation, including credit card debt, student loans, car loans, mortgages, etc.
Before you start investing and saving for your goals, you might consider eliminating credit card debt that carries very high interest rates.
Once all credit card payments are made, you can then take that same amount of money and invest it.
Set up a rainy day fund
Once you pay off your credit card debt, your next short-term goal is to build up a rainy-day fund. This will help you build a cushion for unforeseen expenses like car repairs or replacement of a large household appliance. Also, try not to put large essential expenses on a credit card, because that will just put you back to square one.
Adjust your spending habits
Your next short-term goal is improving your savings by cutting back on unwarranted spending.
Cut back on eating out and restaurants or perhaps try renting movies instead of going to the theater. Think of other expenses that you can eliminate, such as bottled water, magazines at the newsstand, or your unused landline phone at home. If you make small changes in your spending habits now, you’ll have more money to invest.
Choose an investment advisor
Ask for help in setting up your financial plan. Experienced investment advisors will not only help you identify your goals and assess your financial situation, they’ll also help pick investments that are best suited to your goals.
The important thing is to simply get started and determine your short-term goals. When you do this, you’ll be able to move on to achieve medium-term and long-term goals.