Short-term goal setting is crucial to your financial success. Read to learn how to set short-term financial goals that will help you financially succeed.
Antoine de Saint-Exupéry once said, “A goal without a plan is just a wish.” While this French writer lived nearly 100 years ago, the sentiment still applies, especially in personal finance.
With an abundance of ways to use your money to increase your wealth, it is critical to place yourself in the best financial situation possible by making wise financial decisions. While planning, you should set SMART financial goals to achieve financial success. Creating a financial plan will keep you motivated and on track to reach each specific goal you set.
Whether you want to save for a summer vacation, upgrade your car, or pay off your student loan debt once and for all, creating a plan for your goals will increase your chances of achieving them.
In this article, we’ll discuss some common short-term financial goals you may be interested in pursuing this year. We’ll also explain how to use the SMART framework to ensure you reach your financial goals on schedule.
Short-term financial goals are financial goals you hope to reach within the next few months to three years. Some common short term financial goal examples include:
Long-term financial goals, on the other hand, may take you several decades to achieve. Some common long-term financial goals include paying off a mortgage or saving enough money to retire.
Short-term and long-term financial goals can help you manage your money better and enhance your financial security over time. While both types of financial goals are worthwhile, we’ll focus on short-term goals in this article.
If any of the short-term financial goals we listed above sound enticing to you, you may be wondering how you can reach them in the next few months or years. The SMART goal-setting framework can help you do just that.
SMART stands for specific, measurable, attainable, relevant, and time-bound. Let’s take a closer look at what each of these components means in terms of personal finance:
The first step to achieving a goal is defining it clearly. In other words, you want to make your goal specific. For example, maybe your initial desire is to save more money. But why? What do you want to use the money for? Do you want to have emergency savings to pay off a possible unexpected expense?
After some reflection, you may realize that you want to save more money so you can finally pay off your debt and enjoy the freedom that comes with it. Or maybe you want to be able to afford to take a memorable vacation with your family each year.
Clarifying your goal will not only help you develop an action plan, but it can also enhance your motivation to achieve it.
Next, you want to become clear on the metrics involved in your goal. After all, if your goal isn’t measurable, you won’t have any way of knowing when you’ve achieved it.
You can determine how to measure your goal by figuring out the amounts you’ll need to save (or pay off) to reach it. For instance, continuing the previous examples:
With these measurable metrics in mind, you can start developing a plan to reach your goals over time.
The next step in crafting a SMART goal is to give yourself a bit of a reality check. If your goal isn’t attainable, you’re setting yourself up for failure before you even start.
For example, it’s unlikely that you’ll be able to save up enough money to cover your credit card debt in the next week. However, after doing the math, you may find that you can reasonably pay it off within the next year.
When you make sure that your goal is achievable, you can confidently pursue it, knowing that your hard work will pay off if you just stick to your plan.
Not all short-term financial goals are worth pursuing or relevant to your current place in life. It ultimately comes down to your timing, values, and priorities. Thus, after checking in with reality, you’ll want to check in with yourself.
For instance, if you want to eventually become debt free, saving up for a new car may not be the most relevant goal to pursue right now. Instead, it may be more worthwhile to pay down your high-interest credit cards first.
Ensuring that your goals align with your top priorities will help you focus your efforts where they matter most.
Lastly, each of your goals should have deadlines. By restricting the amount of time you have to achieve a goal, you give yourself that much more motivation to stay accountable to it day to day.
Let’s walk through an example:
If you didn't set this deadline, you might not know how to track spending habits or contribute to your savings accounts each month. Instead, you may simply stash away a few hundred dollars every once in a while and fail to reach your goal in a timely manner.
By using the SMART framework to set your small-term financial goals, you can pursue your objectives with more clarity and motivation.
In addition to using the SMART framework, you can also increase your chances of reaching short-term financial goals by:
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By freeing up money from your home equity, you can finally achieve many of your short-term financial goals—whether that’s building your dream home, financing a critical medical procedure, or simply enjoying a little more spending flexibility throughout the month. What’s more, you can offload the burdens of maintaining and repairing your home to us at Truehold.
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Want more personal finance tips and tricks from Truehold? Check out our helpful family financial planning resources today.
1. Forbes. The Ultimate Guide To S.M.A.R.T. Goals. https://www.forbes.com/advisor/business/smart-goals/
2. MSU. Achieving your goals: An evidence-based approach. https://www.canr.msu.edu/news/achieving_your_goals_an_evidence_based_approach
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