When it comes to creating your savings, there are two ways of saving. You can either save for a short term goal or a long term goal. It is important to develop a list of your financial goals because you are morel likely to follow through and achieve them. As your life changes, so will your financial goals, which is why it is important to constantly reevaluate and set new goals for yourself. Let’s take a look at short term vs long term financial goals.
Short term financial goals
As you probably know, saving doesn’t just happen overnight. Any kind of savings takes time and patience. This is why short term goals are those that might take a year or two to complete. Short term financial goals that can be achieved in just a couple of years are paying off a debt, developing an emergency fund, saving for a vacation, or saving for a home improvement project. Each of these goals can be achieved in just a short couple of years based on if you properly set aside the money in a savings account, and budget your monthly expenses to include this savings. These types of short term financial goals can really take away the burden of having to get a loan or use a credit card. With a loan or credit card, you will end up having to pay back the money with added interest. If you instead have your short term savings available, you can use it for whatever you might need it for, without having to pay any additional money.
Long term financial goals
These types of goals are going to take much longer than a couple years. If you do not wish to flat out finance a vehicle or finance with a high monthly payment, then you might set a long term goal of saving to purchase a new vehicle in full. Many car dealerships will work with you to negotiate the price of a vehicle, and might even lower it significantly if you are willing to pay in full. Another long term financial goal for saving is for the down payment on a home. An FHA down payment is 3.5% of the total price of the house. This means that for a $200,000 home, you will need at least $7,000 as a down payment. Saving this kind of money will take several years. Other long term saving goals can include saving for retirement or saving for a child’s future education.
Creating short term and long term financial saving goals can really help push you to begin saving. As we always say, some savings is better than no savings at all. Make a list of your financial savings goals, both short term and long term, and see how you can begin working on these goals immediately.