How To Set & Achieve Short-Term Financial Goals (Plus SMART Examples)

Are you looking to get your finances in order but don’t know where to start?

Setting and achieving big financial goals can seem daunting, but it doesn’t have to be.

By breaking down your long-term financial goals into smaller, more manageable short-term goals, you can put yourself on the path to success.

Not sure how to do that?

Keep reading for a guide on how to set and achieve short-term financial goals, plus some SMART goal examples.

Why Setting Financial Goals Matters

One of the best ways to achieve financial success is to set goals.

Having specific targets to focus on can help keep you motivated and on track.

But what if your long-term financial goals seem out of reach?

That’s where setting short-term goals come in.

How To Set Short-Term Financial Goals: A Step-By-Step Guide

1. Define your long-term financial goal/s.

Before you can start setting short-term goals, you need to know what your endgame is.

What are you hoping to achieve with your money?

• Do you want to retire early?
• Buy a house?
• Travel the world?
• Build up your savings?

Once you have a clear understanding of what you want, you can start working backward to create smaller, more readily achievable milestones.

2. Determine how much money you’ll need to reach your goals.

This step will give you a better understanding of the scope of your goals and help inform the steps you need to take to reach them.

For example, let’s say your goal is to retire early at age 55 with $1 million saved.

To do that, you’ll need to figure out how much money you need to save each year starting now until retirement age, as well as how much money you need to live off of once retired.

This will help give shape to your future plans and provide context for setting tangible short-term targets.

3. Set realistic timeframes for each goal.

Short-term goals should always have a timeline attached so that you can measure progress and determine whether or not you’re on track.

When setting these timeframes, be realistic about what you can achieve given other commitments like work and family obligations.

For example, if your goal is to save $10,000 in one year, but you only have $500 left over each month after covering all of your expenses, it might be unrealistic to expect that you’ll be able to save the entire amount in 12 months’ time.

You may need to extend your timeline or reevaluate your monthly budget.

4 . Create measurable benchmarks for each goal.

As with timelines, benchmarks are essential for tracking progress and determining whether or not a goal is achievable.

For instance, if saving $10,000 in one year is unrealistic, you may need to break that number down into smaller chunks like saving $833 per month or $192 per week.

Similarly, if retirement seems like a far-off dream, you may want to set an intermediate goal of saving just 1% your first month and gradually increasing that by 1% each month until you’ve reached your target savings percentage.

By breaking these types of goals into manageable pieces, you can increase the likelihood of success while still feeling like progress is being made.

Examples of Smart Short-Term Financial Goals

Now that you know how to set short-term goals, let’s take a look at some examples of SMART personal finance goals that can help you achieve your long-term financial objectives.

Budgeting and financial planning

Creating a plan for your money is an essential first step in taking control of your finances.

While financial planning may be more of a long-term goal, learning how to make a budget you can keep is a great short-term goal to set you on the path to financial freedom.

Here are some SMART goals to help you get started with your financial plan:

• I will track my spending every day for a month so that I can be more aware and intentional with my money.
• I will make a list of my variable and fixed expenses so I can monitor my cash flow more effectively.
• I will research and choose a financial coach or planner by the end of the month.

Creating an emergency fund

Having an emergency fund is one of the most important things you can do for your financial well-being.

An emergency fund is a savings account that you can tap into in case of unexpected expenses, like a job loss or medical bills.

Ideally, your emergency fund should cover 3-6 months’ worth of living expenses, but even a smaller amount can be helpful in a pinch.

If you don’t have an emergency fund, or if yours is running low, one of your financial goals should be to fill it.

Some SMART goals you might set if you’re looking to build your emergency fund are:

• I will save $500 per month for the next 12 months so that I can have a $6,000 emergency fund by the end of the year.
• I will have $1,000 saved by the end of the month so that I can cover unexpected expenses if they arise.
• I will set aside $100 per week for the next month so that I can have $400 saved in case of an emergency.

Building sinking funds

Sinking funds are another important tool for managing your finances and achieving financial stability.

Unlike an emergency fund, which is meant to cover unexpected expenses, a sinking fund is designed to help you save for specific, known, or anticipated expenses.

Some common examples of large expenses that people often set sinking funds for include vacations, home repairs, car repairs, holiday spending, or replacement appliances.

Sinking funds are a great way to prepare for unpredictable expenses.

Even if you’re building your sinking funds over time, having at least some money set aside might help you avoid going into debt when expenses hit.

Here are a few SMART goals you to set if you want to build your sinking fund:

• I will save $50 per month for the next 12 months so that I can have a $600 Christmas fund by the end of the year.
• I will save $100 per week for the next month so that I can have $400 saved by the time my car insurance bill comes due.
• I will set aside $250 per month for the next 6 months so that I can have $1,500 saved by the time my family goes on vacation.

Paying off high-interest debt

If you have high-interest debt, like credit card debt or a personal loan with a high-interest rate, it can be helpful to focus on paying that off as quickly as possible.

The longer you carry that debt, the more money you’ll end up paying in interest.

So, if you can free up some extra cash each month, one of your goals should be to put that money towards paying off your debt.

Use a debt repayment calculator to figure out how much impact those extra payments will make.

Some example SMART goals for paying off your high-interest debt include:

• I will pay $250 towards my credit card debt each month for the next 24 months so that I can be debt-free by the end of that period.
• I will make an extra payment of $100 towards my student loan debt each month so that I can pay it off in five years instead of seven.
• I will put any windfalls I receive towards my debt so that I can pay it off more quickly.

Saving for a major purchase

If you’re saving up for a big purchase, like a down payment on a house or a new car, you’ll need to create a savings plan and make regular contributions to reach your goal.

First, determine how much money you’ll need to save and when you’ll need it.

Then, set up a savings account specifically for this purpose and make sure you’re automatically transferring a fixed amount of money into it each month.

These SMART goals will help you save for a major purchase:

• I will save $500 per month for the next 24 months so that I can have a $12,000 down payment for a new car by the end of that period.
• I will save $1,000 per month for the next 60 months so that I can have a $60,000 down payment saved for a house by the end of that period.

Saving for retirement

If you haven’t started retirement planning, or if you’re behind on your retirement savings goals, now is the time to start putting extra money away.

The sooner you start saving, the more time your money has to grow.

If you’re not sure how much you should be putting into your retirement fund, there are a number of retirement calculators that can help you figure that out.

Once you know how much you need to save, you can set up a retirement account and start making regular contributions.

Try these SMART goals if you’re looking to save for retirement include:

• I will save 10% of my income each month for the next 30 years so that I can have a comfortable retirement.
• I will invest $50 per week in a Roth IRA so that I can take advantage of tax-free growth.
• I will make contributions to my 401(k) up to my employer’s match to increase my retirement funds.

Investing

Investing is another important way to secure your financial future.

When you invest, you’re essentially putting your money into something with the hope that it will grow over time.

There are a number of different ways you can invest, so it’s important to do some research and figure out what makes the most sense for you.

Once you’ve decided how you want to invest, you can start putting some money aside each month to reach your goals.

Here are some example SMART goals you might set if you’re ready to invest include:

• I will invest $200 per month in a diversified mix of index funds so that I can reach my goal of $12,000 in investment income within five years.
• I will research and invest in one stock per month for the next 12 months so that I can learn more about investing and grow my portfolio.
• I will set up a monthly automatic investment plan with a financial advisor so that I can dollar-cost average my investments and automatically reinvest any dividends I earn.

Making extra mortgage payments

If you own your home, making extra mortgage payments and paying off your mortgage early can be a great way to save money in the long run.

By paying down your principal balance, you can reduce the amount of interest you’ll pay over the life of your loan.

You can also shorten the length of your loan by making additional payments.

Some SMART goals you might set if you’re looking to make extra mortgage payments include:

• I will make biweekly mortgage payments instead of monthly payments so that I can save money on interest and pay off my mortgage sooner.
• I will make a lump-sum payment of $1,000 towards my mortgage principal when I get my tax refund so that I can reduce the amount of interest I pay over the life of the loan.

Increasing your income

One of the best ways to improve your finances is to increase your income and, ideally, put your extra earnings toward your savings goals.

There are a few ways to make more money, including asking for a raise at work, switching to a higher-paying job, or starting a side hustle.

If you’re looking to boost your income, here are some SMART goals you might set:

• I will research salary ranges for my position and industry this week so that I can negotiate a higher salary when I speak with my boss next week about a raise.
• I will research passive income opportunities and begin creating multiple income streams so I can double my earnings over the next year.
• I will start a side hustle and make an extra $500 per month so that I can pay off my debt by the end of the year.

Improve Your Financial Situation

Making some changes in your spending and saving habits can go a long way toward improving your financial situation.

By setting some SMART financial goals, you can make sure you’re on the right track and taking the steps necessary to achieve your long-term objectives.

What are some of your financial goals? How are you working to achieve them? Let me know in the comments below.