Why Short-Term Financial Goals Are a Smart Idea

Big financial dreams — like buying a house or retiring comfortably — can feel unattainable. But the key to long-term success starts with smaller, achievable steps. 

Setting and achieving short-term financial goals can help you reduce stress, build confidence, stay focused, and make consistent progress toward a stronger financial future. 

What are short-term financial goals? 

A short-term financial goal is one you’d like to reach soon (in the next couple of years or less). Short-term goals should be realistic and well within your reach. Don’t set yourself up for failure by creating unachievable goals. 

Examples of achievable short-term financial goals can include: 

• Creating a budget
• Saving up for a car
• Paying off a credit card
• Going on a trip
• Qualifying for a mortgage 

Whatever your goal is, having a plan is essential. With a clear and easy-to-follow strategy, you have a better chance of achieving the financial goals you've set for yourself. 

Setting short-term financial goals can motivate you to spend less, help you save more money, and make it easier for you to manage your money wisely. Each of these things sets you up for financial success and significantly reduces financial stress. 

Short-term vs. mid-term vs. long-term financial goals 

Having clear financial goals can make all the difference when managing your money. But remember, not all goals are the same. 

Some can be reached in a few months, while others can take years of planning. Understanding the difference between short-term, mid-term, and long-term financial goals can help you make smarter financial decisions. 

Compared to short-term goals, mid-term goals are things you want to achieve over the next few years to a decade, like setting aside money for your child’s education. 

Retirement and paying off student loans would fall under the category of long-term goals. 

How to set short-term financial goals 

Setting short-term financial goals is a great way to create lasting money habits. Whether you're saving for an emergency fund, paying off a small debt, or budgeting for a big purchase, having a clear plan can help you stay focused and motivated. There are a few steps you can take to start your short-term financial planning journey. 

1. Determine your goals 

Think about what types of goals you’d like to achieve in the near future. Are you thinking about buying a new home? Or maybe your car broke down, and you need a new one. 

It can be helpful to write down all your short-term goals on a piece of paper. You may even want to put them somewhere visible, like on your refrigerator or your desk, as a reminder of what you’re striving towards. 

2. Use the SMART goal strategy 

There are many ways to achieve financial goals, but one of the most popular methods is the SMART goal strategy. Here's how the SMART strategy works: 

• Specific: Your goal should be specific and clear.
• Measurable: You should have a way to measure your progress so you can monitor how close you are to achieving your goal.
• Achievable: Your financial goal should be something you can actually achieve.
• Relevant: Make sure your goal is relevant to your life.
• Timely: Set yourself a timeline for achieving the goal to help keep you motivated and on track. 

3. Create a budget 

A budget is a plan meant to help you keep track of your income and spending to ensure you don’t overspend. Making a budget will also help you divide your money and dedicate it to specific bills or categories. 

The pay-yourself-first budget, for example, involves paying yourself first instead of covering your bills. Another type of budget is the zero-sum budget, which requires you to choose a “job” for every dollar of your monthly after-tax income. 

The 50/30/20 budget rule tends to be the most popular budgeting option. It divides your income into three categories: 

• 50% (needs) - Needs include essential expenses like rent, utilities, groceries, and insurance.
• 30% (wants) - Wants cover non-essential spending, such as dining out, entertainment, and shopping.
• 20% (savings and debt repayment) - The remaining 20% goes toward building savings, paying off debt, or investing for the future. 

4. Stick to your financial goal plan and adjust as needed 

Once you have created a plan to achieve your short-term financial goals, stick to it. You can change your plan at any time. In fact, there’s a good chance you’ll adjust your financial goal strategy as time goes on and you have different needs and priorities. 

3 examples of short-term financial goals 

Create an emergency fund 

An emergency fund can help you cover unexpected expenses, such as a car repair, a leaky roof, or medical bills for an unexpected hospital visit. If possible, try to save three to six months’ worth of expenses and put the money in a high-yield savings account. 

Pay off credit card debt 

The sooner you pay off your credit card debt, the more you’ll save on interest charges. Paying it off quickly can lead to thousands upon thousands of dollars in savings. Achieving this short-term financial goal may also significantly free up your monthly cash flow. 

If you’re unable to pay off your credit card debt in a single payment, you should try to pay a little more than the minimum payment each month. This will help you pay it off faster, as the minimum payments almost keep you stagnant. 

Save for a down payment on a house 

To take out a mortgage, you’ll likely need a down payment. If you currently rent and would like to become a homeowner someday, it may be a good idea to save for a down payment. Your down payment could be anywhere from 3.5% to 20% of your anticipated home price. 

Meet your short-term financial goals with an Advance America loan 

At Advance America, we can help you achieve some of your short-term financial goals. Whether you need a quick Cash Advance or a larger, longer-term loan like an Installment Loan or personal Line of Credit, we’re here to help you get the money you need.