We all have problems setting long-term goals, especially when it comes to our finances. The future seems so far away. But what about short-term money goals? While you might imagine we’re better with short-term planning, Americans find that difficult too. According to a recent AP poll, two-thirds of US citizens would struggle to cover a $1,000 emergency. That means most of us are one small mistake or repair away from financial difficulty.
Setting good short-term goals is a necessary step toward a secure fiscal future. The hardest part is getting started. Americor has a few ideas on how to help you achieve your near-term goals, which will give you a solid financial foundation going forward. There’s a difference between general goals and effective goals. Most of us make plans all the time by telling ourselves “I’ll try to save more money.” These tries rarely work. Good goals are specific, reasonable, measurable, and time-bound. Instead of making a vague statement, tell yourself something like this: “In the next three months I’d like to increase my contribution to my savings by 50%.” The more specific, the easier it will be for you to imagine fulfilling your goals.
The first goal on your list should be to establish a budget. Most of our spending is out of control because we don’t keep track of where our money goes. Write down your income, all your expenses, and allocate accordingly. Try out the 50/20/30 plan, which has proven to be an effective, sustainable budget for many consumers.
One good money goal to start with is the statistic listed in the first paragraph: try to save up an emergency fund that is—at a minimum—$1,000. Putting aside just $100 a month can get you there in less than a year. You’ll feel much more able to achieve your money goals if you’ve got some cash in your back pocket for when your transmission blows out. Once you’ve got an emergency cushion, start allocating money toward paying off your debts. This is normally a long-term problem since credit card and student loan debts can linger for years. But you need to be thinking about these debts in the short term. Try paying off your smallest debt, then putting that payment money toward your larger debts. The more money you can focus on debts in the short term, the more you’ll save on interest over the long haul.
Next, set short-term goals to rein in spending habits. Eat out less. Try to go on a spending fast. Or even take that most drastic of measures, the (literal) frozen credit card. Reduce your grocery budget by $50. Build goals that work for you. But placing measurable caps on spending can greatly increase the cash you have on hand to put toward your other financial plans.
Setting goals isn’t easy and sticking to them is even harder. But giving your bank account a secure short-term standing will make your life much easier in the long run. Financial planning can be especially difficult on your own. Call Americor to discuss how we can help you achieve your financial goals for a stable future.