Most people want financial stability, but very few have it. Sometimes, we get caught up in poor money management practices, take on too much debt, or experience a crisis that is outside of our control. Thankfully, the damage from these issues is preventable. In fact, safeguarding against these issues is one of the first steps to creating financial stability. The key is to establish short-term financial goals that will put you on a path to financial health. Remember, short-term financial goals can be achieved pretty quickly, but they are also not as significant as long-term goals like retirement savings. The important thing about short-term financial goals is that they make long-term goals possible. The key thing to remember here is that goals are more substantial than wishes and dreams. They can start with dreams or wishes, but they have an action plan behind them– something that spells out how we convert a desire into something real.That’s especially important when it comes to financial goals. Since they require regular investments of money and effort over a long period of time, you need to have workable plan to bring them to reality.Let’s take a look at the short-term financial goals that you may want to work toward.
1. Short term for long term
Sometimes it may take a short-term goal to kick-start a longer-term financial dream or goal. For example, the mutual fund you want to invest in has a $3,000 minimum initial investment. Once you have saved the $3,000 and opened an account you can add to it in $100 increments, building wealth for the long term. Other short- to long-term goals could be saving enough to open a stock brokerage or futures trading account.
2. Pay off debt
Pick one of your credit card balances and make a plan to pay it off in a year or less. If you are in the habit of making the minimum payment, you will end up paying for years, including a lot of interest to the credit card company. This is a goal to break that habit. If you run balances on several cards, use the smallest balance as a short-term goal, pay it off as quickly as possible and then on to the next. The medium-to-longer term goal could be to pay off all of your debt except for car and house payments.
3. Plan early for early retirement
Reaching your retirement goals may take longer than you think. Poor health may make retiring early a necessity. If you have planned to retire early, then you will be ready. Family circumstances, such as, an aging ailing parent or spouse may require more of your time, thus making early retirement an option. You may not want to completely retire, but desire to work part-time, it is better to be able to retire early and not have to, than to have to retire early and not be prepared to. Making sure to set something aside for early retirement is a short term financial goal that just makes sense.
There’s one other advantage to planning to retire early, and it’s a big one. By working toward early retirement, you will be front-loading your retirement investment portfolio. That will give you a larger portfolio early, which will mean that you won’t have to work so hard saving for retirement later in life when doing so may be more complicated.
4. Create multiple streams of income
Even if you love your job, creating multiple streams of income is a form of income insurance. With recent major corporations downsizing, having another stream or two of income wouldn’t hurt. Aside from main income loss, another stream of income could help you with early retirement. One way to create another stream of income is to start your own business. Multiple streams of income can provide you with an income portfolio, meaning you don’t have to depend on one stream of income ever. This goal is worth considering, even if you have never thought of it before, it may be just the thing you need to open the door to other financial goals.
The important thing is to simply get started and determine your short-term goals. When you achieve your short-term goals, you’ll be able to move on to accumulating money for your intermediate and long-term goals.