Many of the most significant items on your $Lifeline are plotted years, if not decades, into the future: buying a house, having children, paying for college, helping elderly relatives, starting your own company, retirement, and establishing a legacy.
But there’s a whole lot of life happening in between those major milestones!
Here are three reasons why you should consider adding some short-term financial goals to your 2024 financial planning.
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A SMART way to move forward.
Unless you win the lottery or lead your start-up to a huge sale, you probably won’t wake up one morning and buy a house. For most folks, the path to long-term financial goals is paved with countless short-term steps that build off each other and generate forward momentum.
The SMART framework — Specific, Measurable, Achievable, Relevant, and Time-bound — can help you break down big goals into smaller goals that you can track, measure, manage, and hit on a regular basis.
For example, before you can buy a house, you’ll need the money for a down payment. Let’s pretend you fall into the median of the National Realtor’s Association data for September 2023, and you’ll need just under $32,000. If you want to buy a house in the next two years, you might set a SMART goal of depositing $1,300 every month into a dedicated savings account. $1,300 is a Specific and Measurable figure. You can review and adjust your monthly budget it make it more Achievable. It’s Relevant because you want to move! And it’s Time-bound to both short-term monthly savings goals and your long-term goal of buying a house.
Even better, as you work towards your home-buying SMART goal, you might identify other short-term financial goals that will help, such as paying down credit card debt.
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Build better financial habits.
Again, setting aside a major windfall, there are no magic tricks that will help you achieve long-term financial goals. But paying yourself first with automatic contributions to your retirement, investment, and savings accounts, living within your means, and keeping debt low are financial planning fundamentals that can help you get where you want to go more efficiently.
Setting short-term goals can put these principles in action and create positive money habits. Perhaps you’re turning 50 this year and your short-term financial goal is to make catch-up contributions to your IRA. You might start by reviewing your monthly budget and identifying excess spending you can cut back on, such as eating out less or cancelling a couple streaming subscriptions you never use. Planning out meals ahead of time and making a weekly grocery run for ingredients could help you start to lower your monthly credit card payments. Add those savings to your automatic monthly contributions and you’ll be topping off your IRA in no time, which will give you a sense of short-term accomplishment as you work towards your long-term financial security.
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Have more memorable moments.
One long-term financial goal that we often neglect is getting more from our money than just more money. If your sole focus is on achieving long-term financial goals, like not running out of money in retirement, you could be missing out on precious opportunities between now and then to do more of the things you love with the people who matter the most.
But how can you be sure that saving for an extra vacation, a new car, or a membership at your local golf club isn’t going to prevent you from helping your kids pay for college in ten years?
A Life-Centered Financial Plan can give you the confidence to enjoy your money more in 2024. Let’s meet to talk about balancing long-term and short-term goals and making next year your best yet.
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