When it comes to saving money, it can be difficult to know where to start.
Short-term savings goals are a great way to begin your journey toward financial security. With the right plan and discipline, you can achieve your short-term goals in no time.
In this post, I’ll share tips on how to make effective goals, accounts you may want to save your money in, and some examples of common short-term saving goals.
Table of Contents
- What Exactly is Considered a “short-term” Saving Goal?
- 5 Tips for Setting & Accomplishing Your Short-Term Savings Goals
- Things You Need To Know About Short-Term Saving
- 7 Examples of Common Short-Term Savings Goals
- Final Thoughts on Short-Term Saving Goals
What Exactly is Considered a “short-term” Saving Goal?
When it comes to financial goals, “short-term” refers to objectives that can typically be achieved within a relatively brief period, typically ranging from a few months to a couple of years.
These goals often involve saving money for specific purposes or events that are expected to occur in the near future. Short-term savings goals can vary widely based on your individual circumstances and priorities.
Examples of these goals include buying a new car, saving for a wedding, putting a down payment on a house, or even just building an emergency fund.
The key characteristic of short-term savings goals is their relatively immediate timeframe, making them an important stepping stone towards long-term financial stability and success.
Whatever your goal may be, having a plan in place is essential for success.
5 Tips for Setting & Accomplishing Your Short-Term Savings Goals
1. Use S.M.A.R.T. Goals
If you’re new to the saving world, and you’d like to start accomplishing your savings goals, you can use the acronym S.M.A.R.T as a tactic for identifying and achieving your financial goals.
The S.M.A.R.T tactic stands for:
- Specific — You should be as specific as possible when creating your savings goals. Identify what you are saving for, and create a clear goal for the savings you want to achieve.
- Measurable — How much money do you want to save up? How much money do you need for your savings goal to come true? Ensure you set up measurable goals to be able to track your progress more easily.
- Attainable — Ensure that the savings goal you create is realistic and make a detailed plan on the steps you need to take to accomplish it.
- Relevant — Ensure that your short-term goal is something that really matters to you and not something that you’ll do just because.
- Time-bound — Setting a realistic timeframe for accomplishing your savings goals will allow you to reach them more easily.
This tactic can truly help you crystallize your financial situation and easily achieve all of your short-term savings goals.
2. Designate a Secure Savings Space
You will want to put your money in a secure and designated location. Often times, it is best to separate the money you are saving from your day-to-day funds so that you don’t accidentally spend it.
If you are the kind of person who likes to pay via card, then maybe keeping the money in cash is a good idea. On the same note, if you are the kind of person who spends every dollar in your wallet… then maybe an online savings account is a better idea!
A high-yield savings account is the best location for money that you may need in the short term. Look into solutions that are FDIC insured, like Atmos Financial Savings. They offer an industry-leading rate of 3.5% and allow you to create up to 6 accounts! This is great if you are the type of person who prefers to designate specific accounts for different goals.
Be very thoughtful about where you put your money as you want it to be safe from accidental spending yet easily accessible for when you need it. That is why investing your short-term savings is typically not a good idea! It would be a shame for the market to have a bad day/week/month, right when you need your money.
3. Stick To a Regular Savings Plan
If you want to achieve your short-term savings goal in a timely manner, you need to create a savings plan and stick to it. You can budget upfront and create a monthly budget that will include money for all your expenses, while also allowing you to leave some funds aside for saving purposes.
If possible, put aside the money meant for savings as soon as you get your paycheck to lower the possibility of spending it on other necessities.
4. Set Up Automatic Savings
Another excellent tip for staying on track with your short-term savings goals and accomplishing them is to set up automatic savings.
I am a huge fan of automating my saving. This makes it easy to work towards these goals without even thinking about it!
In the past, I’ve used apps like Digit to save money without even thinking about it.
There are numerous available wealth management apps that can help you to automate your savings. Most apps allow you to determine a particular percentage of the money you want automatically transferred to your savings account every month.
Some apps, like ChroniFi, even have predictive views that allow you to calculate your money in terms of time!
5. Cut Back on Your Spending by Budgeting
Admittedly creating a budget is probably the least fun tips on this list. That being said, the reality is most people can probably save at least a couple hundred per month just by taking a few minutes to review their spending.
For short-term savings goals, you can try to look for areas in your budget that could be temporarily cut down in order to increase your savings. The two easiest ways you can cut back is usually by eating out less and removing useless subscriptions.
Even modifying your budget for a shorter period could help you reach your savings goals much more quickly!
Things You Need To Know About Short-Term Saving
Types of Accounts
When it comes to short-term savings goals, it’s crucial to choose the right type of accounts that offer accessibility, security, and potential growth for your funds. Here are a few commonly used accounts for short-term savings goals:
Here are 6 account options for your short-term savings:
1. Savings Account
A traditional savings account offered by banks or credit unions is a popular choice for short-term goals. It provides easy access to your funds while earning a modest interest rate. It’s a safe and liquid option for storing money you’ll need in the near future.
2. Online savings accounts
These are one of the most popular choices as they offer higher interest rates than traditional banks and often come with fewer fees.
3. Money Market Account
Similar to a savings account, a money market account offers competitive interest rates and liquidity. It often requires a higher minimum balance, but in return, you may receive a slightly higher interest rate. This account can be a good fit if you have a larger sum of money to save for a short-term goal.
4. Certificate of Deposit (CD)
A CD is a time deposit that locks your money for a fixed period, typically ranging from a few months to a few years. It offers higher interest rates compared to regular savings accounts, but you won’t have access to your funds until the CD matures.
CDs are suitable if you have a specific savings goal with a defined timeline and don’t require immediate access to the money.
5. High-Yield Savings Account
Some financial institutions offer high-yield savings accounts that provide higher interest rates than traditional savings accounts. These accounts may have certain requirements, such as maintaining a minimum balance or using electronic transactions.
If you’re looking to maximize your earnings on short-term savings, a high-yield savings account can be a viable option.
6. Short-Term Bond Funds
For individuals comfortable with a slightly higher level of risk, short-term bond funds can be an option. These funds invest in short-term fixed-income securities and can potentially offer higher returns than traditional savings accounts.
It’s important to note that bond funds are subject to market fluctuations and may not guarantee principal protection.
7 Examples of Common Short-Term Savings Goals
1. Creating an Emergency Fund
One of the smartest short-term savings goals is to create an emergency fund. You never know what may happen throughout life, so having an emergency fund is crucial for staying financially safe during unexpected situations.
Your emergency fund should preferably cover your expenses for the next 3 months. Many experts recommend having 6 month’s of expenses is the ideal amount. That being said, it is often best to start small by working towards a $1,000 emergency fund before tackling these larger amounts!
If you are an entrepreneur, you may also consider an emergency fund that can cover as much as a year’s expenses. Though this amount can seem daunting, it can also provide mental security so that you can weather the fluctuations of your business’ income.
2. Going on Vacation
Another common short-term savings goal is saving up for going on vacation. Whether it’s a weekend getaway or an international trip, setting aside funds specifically for travel expenses allows you to enjoy a well-deserved break without incurring debt.
Consider saving enough to cover your accommodation, travel tickets, meals and pre-plan some of your entertainment expenses.
3. Buying a Car/Upgrading Your Vehicle
It’s also common for people to create a short-term savings goal set towards buying a car or upgrading your current vehicle.
Typically people can collect the money they need for a vehicle upgrade rapidly, which is why this is one of the savings goals that you can quickly achieve.
4. Pay Off Credit Card Debt
If you currently have credit card debt, your short-term savings goal could go toward paying off the credit card debt.
By setting a goal for paying your credit card debt, you’ll be able to improve your financial situation rather quickly. When saving up to pay off your debts, it’s best to first focus on paying off the debts that have the highest interest rates.
Debt collection agencies like Jefferson Capital Systems provide another means of dealing with your debt when it has been sent for collections, potentially forcing a lump-sum payment from you. Credit card debt must have been past due for at least 180 days before it can be handed off to these agencies.
For more information regarding your situation with any particular company you can request a detailed report via their website. Getting rid of credit card debt will not only boost your credit score but will free up money for savings goals in the future!
5. Home Renovations
Whether it’s a small remodeling project or a larger renovation, saving for home improvements is a popular short-term goal. It allows you to enhance your living space, and create a more comfortable environment for your family.
This is a wonderful savings goal because it also doubles as an investment. With the right renovations, you can easily see an ROI of 75-83%! For example, you might look into crawl space encapsulation in Indianapolis, IN. According to the Advanced Energy Study, homeowners can see reductions in their energy bills by up to 15% by encapsulating their crawl space! This type of home investment is also practical as you can prevent dangerous mold growth from occurring. So depending on your goals, there are plenty of remodeling projects you can look at with short-term savings!
6. Education or Training
Investing in personal or professional development is another short-term savings goal. This could involve saving for a certification course, workshops, or continuing education to enhance your skills and expand career opportunities.
For example, I saved up for a Project Management Certificate on Coursera because it costs $234!
7. Large One-Time Purchases
Saving for larger items such as furniture, appliances, or electronic gadgets can be a short-term savings goal. Having funds set aside allows you to make these purchases without relying on credit or loans.
Final Thoughts on Short-Term Saving Goals
Understanding and actively pursuing short-term savings goals is a fundamental aspect of personal financial management.
Short-term savings goals can be achieved with proper planning and discipline. By choosing the right type of account and developing strategies that work best for you, you’ll be well on your way toward achieving financial security in no time!
Remember, setting short-term savings goals is not only about financial discipline but also about creating a more secure and fulfilling future.
What are your top short-term savings goals for this year? How can you optimize your saving strategies and make consistent progress towards your short-term goals? I’d love to hear from you in the comments!
