Saving is always something we want to do more of but it’s easy to get so caught up in our long-term goals that we forget to put some money aside for our more immediate needs.
Short-term and long-term goals are widely differentiated by the time it takes to achieve them. Long-term plans such as retirement and paying off a mortgage are usually achieved after five years or more, while short-term goals can be achieved within six months.
Anything from buying a bike to getting married counts as a short-term goal. Here are some tips and strategies on how you can save for them.
Goal Setting and Prioritisation
Knowing what you are working towards will help you manage your spending and move you closer to financial security. This is why it is important to define specific, realistic short-term objectives that are measurable. Start by highlighting your financial priorities, whether that is paying a down payment on a car or going on that holiday you’ve always dreamed of.
Prioritisation is key here, as you may be tempted to focus on your long-term goals. You should be budgeting money for both future goals and those that align with your immediate needs.
Creating a Dedicated Short-Term Savings Plan
Creating a separate savings account dedicated specifically to your short-term goals will help you achieve your goals on time. With short-term goals, you will want to keep your money as liquid as possible so you can access it as and when you need it. This is why opening a savings account is a great choice.
Your savings plan should be able to be easily adjusted according to your changing circumstances and evolving goals. If you’re looking to take out a low-interest loan, growing your credit score means borrowing is cheaper so you can maximise your savings.
Smart Spending and Cost-Cutting Techniques
The simplest rule to saving is to spend less but this is often easier said than done. This is where implementing some smart spending strategies and cost-cutting techniques comes in. Avoiding impulse buys, reducing your utility bills or taking public transport instead of your car are all examples that can significantly impact your savings.
Knowing how to identify unnecessary expenses is critical to improving your financial management skills and making more informed spending decisions. Finding areas where you can cut down is the perfect opportunity to direct the saved money toward achieving your short-term goals.