Short-term financial goals are those you typically achieve in less than a year, as opposed to long-term goals such as retirement savings. Some important short-term financial goals might not improve your money situation this year, but are important to getting you on the path to significantly improving your wealth over the course of many years.
Create a Budget
Creating a household budget is one of the most helpful financial goals you can set this year. An effective personal budget is more than just a list of spending targets. A comprehensive budget gives you the flexibility to increase long-term savings amounts or pay down debt when you have extra cash, or decrease contributions to retirement, vacation or college tuition savings plans when money is tight.
If you haven’t reviewed your expenses lately, take time to learn where you can start saving money on a regular basis without cramping your style. Many people can significantly increase their net worth through savings available in multiple areas they don’t realize. For example, reducing your electric, gas and water use can save you hundreds of dollars each year. Cutting back a bit on coffee, movies and eating out each month can save you thousands annually. Using coupons and buying in bulk from buyer’s clubs can help you save thousands annually on groceries and household items.
Create a Comprehensive Financial Plan
If you haven’t planned your finances through retirement, make a commitment to do so in the next 90 days. This means calculating how much money you will need for retirement based on your desired retirement age and standard of living. Review your life insurance situation to determine what policies you will want at different stages of your life. Calculate the benefits of contributing to a 401(k) vs. paying down credit card debt. Review your health care costs and decide which insurance plans are best for your situation. If you plan on buying a home, calculate what you’ll need to save each month to get your down payment amount by your target date. If you already own a house, look at refinancing or accelerating mortgage payments.
Meet with a Financial Adviser
While some financial advisers won’t want to manage your portfolio if you have less than six figures in assets, it’s a good idea to pay for a consultation with a financial professional to get you on the right track now. Contact a financial planner who specializes in comprehensive financial planning to get guidance on what you need to start doing now to meet your long-term goals.
If you have credit card debt, take time to analyze it and make a plan to reduce it in the most effective manner this year. Simply paying more than the minimum you owe each month won’t help you if you have significant debt. Rank your credit cards by your annual percentage rates and fees. Look for a new card that lets you transfer a balance to a 0 percent interest rate for at least 12 months. Compare the transfer fee to the amount of interest you’re paying on your card with the highest rate to see how much you’ll save. Consider decreasing your contribution to your 401(k) for one year and putting that money toward debt reduction. You’ll lose money in the long run, but will improve your credit score and reduce interest payments in the short run.
Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living.net, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.