Short vs. long term goals can seem simple to define in life, but what about when it comes to money? Like your other goals, your money goals should be categorized in short and long term goals with an appropriate timeline. We’ve outlined some short and long term money goals, how to prioritize, and save!
Short Term Money Goals
Your short term goals are your immediate expenses. These expenses are occurring within a few months or years. Your short-term goals could include building your emergency fund, paying rent, student loans, credit card bills, and your wedding expenses.
Long Term Money Goals
The significant picture expenses are your long term money goals. These goals will take years — think decades — to reach. They involve more money and time than your short term goals. Some examples are saving for your retirement, paying off your mortgage, and saving for your child’s college tuition.
Prioritize
Keep working on your typical expenses, paying off your needs to live. It is normal to have a mix of short and long term goals with your current budget. The key is to work around your usual expenses and then save/pay the rest to reach your money goals. Emergency and retirement funds are a high priority — try to continue to contribute each month and pay off your debt. Once you do that you can allocate your money towards your wants and goals.
Continue your 50/30/20 rule for budgeting and add in your short and long term money goals. Create an achievable timeline for some of your goals, and once you achieve them, you can add more. Cut back on purchases you don’t need and put that money towards your short and long term goals.
How to Save
For your short term goals and emergency fund, you could open a savings account. This account is generally easy to access and does not accumulate much interest, which is okay for short term money goals since that money will go towards something quickly. For your long-term goals, you could consider an account that has high interest but takes time to build as your long term money goals won’t be reached for at least five years. When saving for retirement, consider an IRA account. Here at DEXSTA, we can help answer your money goal questions, feel free to contact us or visit one of our branches for more information.