Today, I’m going to be talking about short term financial goals that you should consider achieving as soon as possible in order to get closer to Financial Independent.
Set the right mindset
Now, whenever I’m talking about goals, I want to make sure we understand that the really major things we’re trying to do in our life is to try to become financially independent.
I don’t think having a goal of being financially independent is going to be sufficient. I think what you have to do is make a promise to yourself. Goals can be really a problem. We’re going to talk about goals today but I want you to realize that goals can also be the kind of intentions that take you off the hook of actually making your dream a reality.
If I say it’s my goal to see you at dinner tonight at 6 pm. You kind of know that there’s a good chance I won’t be there. Because a goal is kind of an intention and you got to remember the old saying “the road to hell is paved with good intentions”
So what I want you to do is to form these goals that we’re going to talk about around a very serious promise to yourself that you will achieve them in a very specific amount of time.
Now, we can’t make tons of promises we need to have goals that will point us in the right direction but start with a major promise about your finances that you’re going to achieve.
And in order to achieve your promise you need to divide it into a list of goals.
Let me explain even more
If the promise is “you’re going to cross the country from California to New York City in a year”. Then you’re going to have goals to get there.
So, I promise I’m going to be in New York in one year and then my goals are:
- I’ll go from Los Angeles to Las Vegas in a certain amount of time and so on.
So goals are going to be steps to get to this promise of having a great Financial Freedom.
Now, the key to setting goals is to make a habit of setting them and then revising them as you achieve them or as you fall short of them.
I set new goals every year, month, and week. I even look at my goals every day and review what it is I want to achieve that day.
Now, to help get your finances on the right path here’s some clear short term financial goals that I recommend you set. And remember you don’t have to achieve all of these goals at once
The most important thing is to make your own plan, depending on your situation and your circumstances, in order to reach financial freedom.
Invest in your financial education
We’ll talk about other things that you need to include in your short term financial goals list but the first thing is your financial education
This is a time investment more than it’s a monetary one. The more you know about managing your money the better you’ll be at growing your wealth.
Personal finance isn’t taught in schools although it’s a huge factor in our life. So you have to learn about it by yourself.
You can read books, blog posts, or just watch YouTube videos. You have to invest time in learning more about personal finance and money management.
Set a budget as one of your short term financial goals
Most of us hate budgets but if you really are struggling to get to a potentially great retirement you got to set up a budget. It’s the most important thing you can do. So no matter how much money or how little money you have you need to set a budget.
Budgeting is key to get in control of your finances; it’s your map for financial accountability and responsibility
I know it doesn’t sound fun and it isn’t. But setting a budget allows you to exercise discipline. And when it comes down to how you spend your money it’s all about discipline
For instance, do you know how much money you’re going to put into necessities versus how much you’re going to put into savings?
Well, it’s going to be very difficult to build wealth long-term if you don’t know where your money is going.
So budgets are actually a route to Financial Freedom because by managing your money you can control how and when you are able to reach your other financial goals and ultimately that Financial promise you’re making to yourself.
Make a savings goal for yourself
Once you’ve set a budget it’s time to set a savings goal for yourself.
Your savings goal should be attainable but it should also be as aggressive as you can manage.
I like to say that you should put away 10% of every paycheck so you never even see it. Just pay yourself first so you never even have to think about it. Then figure out how to live on the rest of it and adjust your budget accordingly.
Remember the more you save now the more the money will multiply or compound in the market. It’s incredibly important to understand the power of compounding on the money you save now.
Also, it’s important to put aside your savings money first before you pay anything else. Because if your savings are the first part of your budget that you pay they will be much less likely to get left out.
Pay off bad debts as one of your short term financial goals
The only financial goal that’s more important than saving and investing is paying off bad debts.
Now, bad debts are a particular kind of debt. They’re a debt that is carrying a very high-interest rate (like 14% and up). that could easily end up being what you’re paying on your credit cards.
Get rid of those because by avoiding paying 18% interest a year is fantastic investing. so if you could just pay down 18% credit cards that’s as if you’re saving that money to invest for your future.
Now, there is good debt. It’s the kind of debt you incur when you’re investing in something. It could also be an asset that produces a great return.
So for example: if you were to borrow money to buy a house to rent it. That might be good debt because you might get a great return on that investment.
Also, investing in a college education or even a high school education is fabulously good debt because debt for Education that’s going to benefit you by making you more productive and making you more money is good debt.
Bad debts are when you go out there and buy stuff just to impress people who you don’t know and who don’t care about you anyway. That is the worst kind of debt in the world so stop doing that.
So high-interest bad debts such as credit cards they work exactly the opposite of a good investment. They’re going to decrease your net worth rather than grow it.
That’s why paying off debt such as these should be your first priority in your short term financial goals list.
Get your credit in check
Start by getting a handle on what your credit score is and the factors that affected it. If your credit score is lower than you would like it to be. Then take some steps to improve it
Pay off debt and keep the balances on your credit cards low. That works pretty good to getting a better credit score.
Here are some things that knock your credit score down that you might not realize:
Be careful when you do a credit check through somebody that you want to buy something from. Especially if it’s something big like a car or a house. Ask them if they’re going to do it in such a way that’s going to hurt your credit score.
Stop taking on more debt
You should pay off your existing debts. That would be great, but it’s going to be nearly impossible to do that if you continue borrowing more.
Make it one of your short term financial goals to stop the damage right now by promising yourself you won’t take on any more bad debts.
Now, to pull this off you probably going to have to make changes in your spending habits
You should think: do you need that car? Those new electric devices where you can kind of just keep on using what you already own?
If you don’t always pay off your credit cards every month you really got to change your spending habits and even stop using them all together and start using cash.
Save for your retirement
Yes, saving for your retirement should be on your short term financial goals. Because you’ve got to be thinking out there more than just what’s going on in the next couple of months. The key to having a prosperous retirement and having a good financial future is to start saving for it as early as you can.
The time you have to save the more your money will grow thanks to the compounding rates of return.
If you had started saving already set up an IRA. They’re really easy or a 401k plan if you’re there with your own business take advantage of it.
Take advantage of any employer matching funds you’re offered and don’t leave free money on the table. Max out your 401K so your employer will have to max out their half of it.
Cut back on expensive habits
You might think that you don’t have much money to invest but if you have expensive habits then you have a source of ready-funds you can tap into.
You don’t have to live in a totally minimalist life but you should be able to see where you can cut back without feeling like it’s a big sacrifice.
Here is an example:
Let’s say you like to go out for really high-end dinners. You’re all about being a foodie but consider going a little less often or consider eating in less expensive places. You can be a foodie about middle-range restaurants it’s still okay.
You may even make new discoveries you wouldn’t have otherwise known about.
A little luxury could go a long way but remember you also have to prepare for your future. So look for a balance between those things
Get your taxes done early
Like it or not tax season always comes up quicker than you think. Each year many of us make the mistake of waiting until the last minute to get their taxes organized.
Avoid the stress and the hassle that comes with waiting around to the last minute because things can happen. Set a goal to have your tax documents fully prepared as soon as possible
Get ahead of the game and don’t let your taxes to the last minute only to realize that you spend more than you should and have problems paying the IRS.
Start considering your investing options
Saving and getting your finances in order is so critical and so important because when the market drops we want to be ready to take advantage of the fire sale on wonderful opportunities.
So, after you get your finances in order your next short term financial goal should be investing. Whether you invest in real estate, stocks or anything it doesn’t really matter as long as it’s growing your net worth.
Make it one of your short term financial goals to consider investing options. In order to grow your income and be in a better financial position.
Thanks for your time
This was my approach to your short term financial goals. I hope you liked it and if you did then I recommend you to join my newsletter I post about money management and how to make money online.
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