Is your kitchen looking a little worse for wear or you want to hit the beach of Hawaii? Renovating your kitchen and a spectacular trip to an exotic location are examples of short-term financial goals. These are goals you want to accomplish within the next five years.
Reaching financial goals isn’t easy, and often requires planning from the beginning. We created this guide to help you understand your goals and get started saving the money to make them a reality. Your short-term goals are just as important as your long-term ones, so make room for both in your financial planning.
Define Your Short-term Financial Goals
What are the goals you want to accomplish in the next five years? It could include a few expensive goals, many inexpensive goals, or a mix of both. The first step is deciding on goals you think you can accomplish, choosing them, and then defining what each goal entails.
For example, if your goal is to save $5,000 for a trip, then decide where you want to go. Do you want to fly or drive? Do you need to get passports?
Is $5,000 going to be enough? Break down the costs of air travel, hotels, money for fun events, etc. Do you want to make it happen in a year or two years?
Once you have your goals defined and laid out, then you can devise a plan to make it a reality.
Create a Budget that Includes Saving!
You now have your goals defined, so it’s time to start saving. You need to create a list of your revenues and expenditures for each month. The expenditures include all your bills and other payments as well as what you want to save for your goals.
Create a savings account specifically for the goals and put money into it every paycheck. People tend to spend money if they have it, so put your savings into the account before doing anything else.
Don’t Get Discouraged
If you set a timeframe of two years to pay for your short-term goal, then be prepared for the occasional bad month. Perhaps your car needed an expensive repair, or some other disaster caused you to pay for something in an emergency.
These things happen and it may put your goal planning off course. When this happens, don’t get discouraged. Instead, modify your plan and take these issues into account.
It may mean pushing your goal back a few months, but emergencies aren’t reasons to abandon your goals. If you want to make up the money fast, then consider getting an installment loan to pay for the goal or to make up for lost revenue or increased expenditures.
Stick to the Plan!
If you want to reach your short-term financial goals, then follow these steps and you’re on your way. These methods of how to set financial goals are tried and true.
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