Achieving Short-Term Goals

Short-term goals are generally defined as those that can be achieved in one year or less, like getting out of credit card debt or saving for a car downpayment. In order to meet this type of goal, try these strategies:

• Cut expenses to create more discretionary income.
• Set aside a certain amount of money each month.
• Invest in short-term vehicles where you may access assets quickly.

Prioritizing goals
A potential problem with short-term goals is that you have too many of them. They might include paying off your credit cards, saving for a home or car downpayment, saving for a dream vacation or upcoming holiday expenses. When faced with too many goals, it's important to prioritize them to ensure that you focus on the most important ones first.

Savings strategies

• Pay yourself first. After the mortgage and utilities but long before the pizza and videos, write a check for the same amount each month and deposit it into your savings or short-term investment account.
• Continue making payments. Say you just paid off your car, continue making the same payments each month, only now deposit them in your savings account before the money gets spent elsewhere.
• W-2 withholdings. If you generally receive a large tax refund at the end of the year, your employer is probably withholding too much from your paycheck. Reduce your deductions and put the pay increase directly into an interest bearing account to help save towards your goal.

Investment selection
For short-term goals, fixed rate investments are your best choice. These guarantee to pay a certain amount of interest on your deposit as long as you maintain your investment for the specified period of time.

• Treasury bills. Issued by the U.S. government and backed by its full faith and credit. Treasury bills have a maturity of one year or less and are exempt from state and local taxes.
• Certificate of deposits (CDs). Short- or medium-term, interest-bearing, FDIC-insured debt instrument offered by banks and savings and loans; features low risk, low return, and an early withdrawal penalty.
• Money market accounts. Short-term debt securities, such as banker's acceptances, commercial paper, negotiable certificates of deposit, and Treasury Bills, with a maturity ranging from 30 days to one year.

Page 3 of 6: Setting Financial Goals

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