A car in the driveway, a house owned outright, and a college degree: the classic hallmarks of the American dream.
All of these are long term financial goals, requiring saving strategies, payment plans, and some serious discipline. But what about your short term financial goals? We can’t just focus on the pie-in-the-sky dreams without thinking about bettering ourselves in the meantime.
Some short term financial goals might include paying down credit card debt or freeing yourself from the yolk of student loans. If you’re looking for a smart money lifestyle shift, consider creating a budget and tracking your spending to start saving more.
Focusing on smart (and smaller) money goals can help motivate you for the bigger ticket items like buying a house or retiring early.
Developing smart money habits when you’re young is easier when you have incentives throughout the process. Here’s how to tackle short term financial goals… and how they can motivate you to accomplish the bigger ones as well.
5 Short Term Financial Goals You Should Be Working Towards
1. Building an Emergency Fund
One of the most important short term financial goals to accomplish is creating an emergency fund. This fund can be 3-6 months worth of expenses to have on hand just in case something unexpected comes up.
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Medical bills or car repairs can sometimes be unexpected so it can be good to have a fund just in case these come up. It can be a good idea to start with this as your first goal and then work on other financial goals from there.
2. Paying Down Credit Card Debt
With the average American household carrying carrying $6,849 in credit card debt , it’s no small wonder this idea is at the top of our list.
Typically, credit card debt involves punishing interest rates and hefty late fees, to say nothing of the effect carrying a monthly balance can have on your credit score. Getting out from under credit card debt can be a huge anxiety reliever.
If it doesn’t seem feasible to you, consider taking out a personal loan to repay the credit card debt. personal loans usually offer lower interest rates than credit cards. Unlike most credit cards, there are no extra fees or fine print—and personal loans come with a fixed interest rate. With SoFi, you can consolidate your credit card debt with a personal loan.
3. Paying off Your Student Loans
While this might seem like a big-ticket item, it doesn’t mean you should ignore it. . College debt is punishing enough without paying extra.
If you are paying down your student loans: firstly, you’re on the right track to a secure financial future.
But it is worth checking a student loan refinancing calculator to see if refinancing to a lower interest rate might help you. Check your balances and interest rates across both federal and private loans. Then plug them into this calculator to learn how refinancing can help.
Not all refinancing options are created equal. There are scores of bad actors on the internet who might promise to get rid of all your debt but will only damage your credit score. They prey on your debt anxiety. Make sure you’re refinancing with a reputable lender.
Another benefit of consolidating loans with a lender is that you can change the payment schedule. If you need to contribute less per month over a longer period of time or if you want to make higher monthly payments to pay your debt down as fast as possible, you can decide which option works best for you.
4. Tracking Your Spending
As any money guru knows, tracking your spending is a great way to get on top of both short term financial goals and long term financial goals. It might sound very boring, but creating a budget can help to keep you from frittering away your hard-earned cash.
Seeing where your money goes can also help to set a realistic budget in the future. If you know where your money is being spent, it can be easier to prioritize what matters to you.
Budgeting doesn’t have to be a bad word. For example, if you love live performances but don’t ever end up watching TV, consider cutting the cord and use that money to subscribe to a local theatre for discount tickets.
Or if you enjoy eating out but don’t mind making your own coffee, consider skipping the daily latte and treating yourself to a monthly meal at a fancy restaurant. It’s all about balance.
If you’d prefer an app to manage all of your finances, consider using SoFi Relay. SoFi Relay tracks all of your money, all in one place at no cost so you can stay on pace to hit your goals.
With SoFi Relay you can connect all of your accounts (even one’s not associated with SoFi) on one mobile dashboard to get a view of your balance on the go.
5. Saving More Money
Once you track your spending, you can begin to start saving more. It’s hard to know how to build a strong financial future if you don’t evaluate your current status. Are you splurging too much at your local bar? Or is your wardrobe putting your finances in arrears?
Once you get a clear picture of your finances, it is easier to start saving more, which means working toward long term financial goals like retirement. People with savings goals are nearly twice as likely to spend less than they make and save the difference according to an America Saves Week survey.
If you’ve mastered budgeting and are stashing away some cash every month, first off, congratulations. This is the first step to achieving financial independence.
Now that you are on track for the goals above it could be time to consider using an online investing platform like SoFi Invest® to help grow your nest egg. With no management fees and complimentary personal finance advice, it’s a no brainer.
With SoFi’s automated investing platform, the team manages your passive assets and helps map out a plan to your milestones whether it be early retirement or paying off your mortgage.
Your portfolio will automatically be rebalanced at least quarterly to stay on track with your goals and risk tolerance. And you’ll have access to SoFi financial planners who can offer personalized tips based on your own situation and future long term and short term financial goals.
Or, if you would like a more hands-on approach. SoFi offers active investing where you can buy and sell stocks at no cost. Plus, there are no account minimums.
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