To build wealth and secure yourself financially, it’s important to set financial goals. But not all financial goals have to be daunting, long-term endeavors. Setting and achieving short-term achievements can help you score quick wins. These quick wins give you confidence in your ability to reach your longer-term goals and help you build momentum toward them. With that in mind, this article will dive into four short-term financial goals to set for yourself.
1. Pay off debt
By getting rid of debt, you can free up more money for other expenses. Here are two helpful methods you can use to eliminate debt:
- Debt snowball: This method makes you pay off your debts from smallest to largest principal balance. It can save you less on interest, but helps build momentum by paying off smaller debts faster.
- Debt avalanche: This makes you pay off your debts from lowest to highest interest rate. This method takes longer to pay off your first debt, but it can also allow you to save more on interest payments.
2. Create a budget
Budgeting helps you track where every dollar is going. This reduces your money stress and makes planning for short-term and long-term goals a lot easier.
You can also use your budget to find and cut unneeded expenses. For example, if you have a Netflix subscription you don’t use, your budget helps you uncover and then cancel that subscription to put money back into your pocket.
If you need extra funds to supplement your budget, consider getting a cash advance. These loans come with same-day funding, so you can get the cash you need to cover expenses right away.
3. Build an emergency fund
An emergency fund consists of money you set aside for emergencies, such as car crashes or unexpected medical bills. This fund helps with emergency costs and living expenses while you’re in a financial pinch.
Many experts recommend saving three to six months, although larger families might want to save a little more. You could knock this out within a year, depending on your income and your ability to cut back on spending temporarily.
You should consider putting your emergency fund in a high-yield savings account to earn much more in interest than a traditional savings account. This will help you keep up better with inflation and grow the fund when not in use.
4. Open and contribute to a retirement account
Once you have little to no debt, create and follow a budget, and build an emergency fund, open a retirement account and contribute a portion of your income. These accounts often offer tax advantages, helping you save more. For example, the 401(k) plan and traditional IRAs let you deduct contributions from your income on your tax return. On the other hand, a Roth IRA doesn’t let you deduct contributions, but growth and withdrawals are tax-free in retirement.
The bottom line
Financial improvement is a lifelong journey, but there are plenty of goals you can set now and accomplish within a year. Start by whittling away any debts and creating a budget so you can cut expenses, track your spending, and work towards longer-term goals. Then, create an emergency fund, so you’re prepared for the worst.
Finally, open and contribute regularly to a retirement account so you can take advantage of tax breaks and build wealth for the long term. Achieve these short-term goals, and you’ll be ready for financial success in the long term.
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