Short-term financial goals are a bit different than other types of goals.
That’s partly because our feelings about money are often strongly mixed between hope and profound worry. Strong emotions both help and hinder progress toward goals.
But it’s also because money is highly measurable, which means goals focused on finances can be ultra-specific – and thus potentially more achievable.
“Find a new job that makes me happy” is somewhat nebulous, but “save $1000 by May” can be broken into discrete steps:
“I want to save $1000 by May 30 by automating saving: each time I get paid, $50 will automatically be deposited into a savings account before it ever goes into my checking account. I’ll review my spending each week to make sure I’m on track with my goal.”
Read more Applying SMART Goals to Personal Finance via Simple Dollar
How short and long-term goals work together
“Big things have small beginnings.” – T. E. Lawrence in Lawrence / David the Robot)
As noted by Alicia Adamczyk on Lifehacker, our brains aren’t necessarily hardwired for long-term goals: “One of your key considerations should be the small steps you can take each day or week to get you where you want to go.”
When we attend to our short-term financial goals, we’re infinitely more likely to achieve long-term goals. For example, you can’t easily save for retirement when the interest on debts is soaking up all your money.
Short term goal examples:
As implied by the name, short-term financial goals tend to focus a few months or a couple of years ahead and are based around immediate needs. Short term goal examples:
- Build an emergency fund
- Pay down debt (credit card debt, high-interest loans, etc)
- Get a side gig or additional income
- Make a budget
- Save money (emergency fund, down payment for a house, etc)
- Buy insurance
- Buy larger items such as furniture, car, computer gear
- Pay for larger one-off events such as wedding or travel
- Buy stocks or other investments outside of normal retirement savings
- Set up a Roth IRA
- Make a simple financial plan
- Meet with a financial advisor
- Maintain or even slightly improve credit score
- Automate saving, investing, or payments
Long-term goal examples:
Long-term goals look forward years or even decades. They’re also more expensive than short-term goals and therefore require careful consideration and planning. Long-term goal examples:
- Pay into a retirement fund or accounts
- Pay off mortgage
- Save for a college fund
- Paying off major debt, such as student loans, mortgage, or perhaps a car payment
- Raise credit score to an “excellent” ranking
Note: a list of financial goals listed by outcome is listed at the bottom of this post.
The #1 short-term financial goal for most people in 2019 is to “spend less money,” closely followed by “pay down my debt.”
Tiller asked 539 people across the US from ages 18 – 65 “What is your #1 financial goal for 2019?”
- 27% said “spend less money”
- 25% said “pay down my debt”
- 12% said “make and follow a budget”
- 12% said “build my emergency savings fund”
- 9% said “create an additional income stream”
- 8% -said “better track my spending”
- 6% said “invest more in stocks”
How do short-term financial goals change with age and gender?
Younger people (25 – 34) are more interested in budgeting, while older people (45 – 54) want to invest more in stocks.
According to the survey, people aged:
- 25 – 34 are more likely to say their goal is to spend less money
- 25 – 34 are more interested in making a budget
- 45 – 54 are more interested in paying down debt
- 45 – 54 and 55 – 64 are more interested in building emergency savings
- 35 – 44 are more likely to want to better track spending
- And people aged 45 – 54 are more interested in investing in stocks
Men and women are basically in sync when it comes to making financial goals for 2019.
“Invest more in stocks” was the goal with the biggest delta. 70 percent of the people who chose that goal were men, while just 30 percent were women.
Women were more likely to choose “build my emergency fund” vs men. 58 percent of the people choosing that goal were female.
Many people seem to have their goals in sync with their situation.
It appears that by prioritizing saving money and paying down debt, many people have their financial goals in sync with their current financial situation:
- The average American has less than $4,000 in savings via Motley Fool
- 57% of U.S. adults have less than $1,000 via Motley Fool
- The average American has a credit card balance of $6,375 via CNBC
Examples of financial goals grouped by focus
PLAN & LEARN
- Create a plan for early retirement
- Find a financial planner
- Make (and follow) a budget
- Become more financially educated
- Better track spending
FOCUS: SAVE & REDUCE DEBT
- Automate savings to pay yourself first
- Catch up on late payments
- Build my emergency savings fund
- Get out of debt completely
- Reduce debt
- Save more money
- Spend less money
- Avoid credit cards
FOCUS: SPEND / INVEST
- Get more insurance
- Create an additional income stream
- Buy a home
- Increase investments
- Find a new job
FOCUS: LIFE CHANGE
- Get Married
- Have a child