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
- 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.
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
- 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
- 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.
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
- 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.
3 of 6: Setting Financial Goals
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