How to Create Short-Term Goals
Short-term goals break down your long-term goals into manageable bites. Each time you achieve a short-term goal, you are moving closer to the ultimate, long-term goal behind it. Some believe in doing something daily that works toward fulfillment of your short-term, manageable goals. As long as you create them and set a viable deadline for achieving them, you're on the right track. Short-term goals should be all of the following:
Specific: You should be able to state the goal in positive language and break it down to its smallest denominator.
Measurable: The goal should provide quantifiable, visible results within a certain time frame.
Attainable: Attaining the goal should be a bit of stretch, but definitely within your reach.
Valuable: Achieving of this end should align with your core values.
Progressive: Achieving this goal should also be a step toward a long-term goal.
Primary: Your identified goal should be a top priority that will motivate you to get going.
People often confuse short-term goals with tasks, and it's important to distinguish between them. Tasks are a series of to-do items that you need to address to move you closer to achieving a short-term goal. A short-term goal is a bar you set for yourself that achieves something of value.
When you complete a task, you feel relieved that you can finally strike it off the list, but you don't feel the enthusiasm and excitement that comes when you achieve a true goal.
Your goal may be to get your finances organized, and that might include the following tasks:
Buy filing folders.
Separate all your bills, bank statements, loan statements, investment statements, tax returns, and so on.
File the physical copies in clearly marked folders.
Research and buy a financial and budget tracking software program.
Enter all the pertinent data that will allow you to stay on top of your monthly finances.
That's a series of five tasks that are needed to reach your short-term goal. You're relieved as each task is done, but when you have all five tasks completed, you feel elated because you are more in control of what's happening, and you feel motivated to reach for the next short-term goal — learning how to invest.
Essential
Accentuate the positive. The whole point of making goals is that you are creating a positive vision of your future. If goals are conceived as punishment, you won't feel inspired to achieve them. Instead of writing, “I won't spend any money on luxuries for six months,” write “I am choosing to pay down my credit card debt to zero.” It's not deprivation; it's empowerment!
Pay Down Credit Card Debt by 25 Percent over the Next Six Months
Credit card debt can be a financial killer — unless you've resorted to payday loans (which you should avoid at all costs!), it's probably the most expensive debt you can have. Most people would rather pay the minimum every month, incurring interest on their credit balance, than go without new clothes, shoes, or gadgets for the children.
If you have $2,000 in credit card debt, you can meet this goal by paying about $115 per month over the next six months, provided you also cease charging anything else. Your choices are pretty simple: Earn more, or spend less.
If you can find a second job that pays $10 per hour for an extra three hours every week, for the next six months, you would meet your goal. If you choose to pare down spending, your first task would be to review your budget and find extra funds that can be allocated to the debt. The next task might be to literally deposit cash into a piggy bank until the payment date arrives.
Also, once you've made your selections, it's important to keep your promise to yourself. If you've chosen to eliminate video rentals and movies, for example, the next time you find yourself standing outside a theater, you can remember your goal and feel good about your choice — and then quickly redirect your energy.
Also, another part of the same goal will be to avoid charging new merchandise. Once you've met your initial goal of reducing your credit card debt by 25 percent, you may want to adjust your goal to paying it down completely, or only charging what you can pay when the bill arrives, or at least charging no more than 30 percent of your available credit limit (to improve your FICO score) and then paying triple the minimum payment until it's paid down.
Establish a Money Market Account
This is a quickly achievable, and highly desirable, short-term goal. The tasks involved in meeting it might go as follows:
Research money market accounts.
Determine the one best suited to your circumstances and needs.
If you need to amass additional funds to meet minimum deposit requirements, develop and implement a short-term savings campaign.
Then, when ready, make an appointment and go in to set up the account.
Create a Workable Savings Budget and Open an Account
Creating and sticking to a savings budget is a choice that will pay dividends for life. It's also an exercise that requires you to check your ego at the door so you're open to lifestyle changes. To create a workable savings budget, you must estimate how much you spend every month in elective categories like gourmet food, eating in restaurants, buying fast food, or splurging on things like impulse or trendy clothing, vacations you can't really afford, health club memberships, cable television, video rentals, nights out with the girls, movie dates with the kids, or manicures. You can then determine what and how much can be trimmed or eliminated to invest in a savings account.
Set goals for how much you'll save per month based on how much you want to save over time (see the table that follows). For instance, if you are 30 years old and want to have $342,283 at age 65, plan on saving $200 each month, starting today.
Make sure to maximize the return on your investments — if you save $200 every month for 35 years and only earn 4 percent each year, you'll have approximately half of what you'd end up with if you achieved a 7 percent per year return. Thanks to the magic of compounding, when your savings grow at 7 percent instead of 4 percent, you almost double the total amount saved at the end of 35 years.
Years to spending date |
$100 |
$200 |
$400 |
$500 |
$1,000 |
1 |
$1,238 |
$2,476 |
$4,952 |
$6,190 |
$12,380 |
5 |
$7,120 |
$14,239 |
$28,478 |
$35,598 |
$71,196 |
10 |
$17,105 |
$34,210 |
$68,421 |
$85,526 |
$171,052 |
15 |
$31,110 |
$62,221 |
$124,442 |
$155,552 |
$311,105 |
20 |
$50,754 |
$101,507 |
$203,015 |
$253,768 |
$507,536 |
25 |
$78,304 |
$156,608 |
$313,217 |
$391,521 |
$783,042 |
30 |
$116,945 |
$233,891 |
$467,781 |
$584,726 |
$1,169,453 |
35 |
$171,141 |
$342,283 |
$684,565 |
$855,707 |
$1,711,414 |
40 |
$247,154 |
$494,308 |
$988,617 |
$1,235,771 |
$2,471,542 |
45 |
$353,766 |
$707,532 |
$1,415,065 |
$1,768,831 |
$3,537,661 |
50 |
$503,295 |
$1,006,590 |
$2,013,180 |
$2,516,474 |
$5,032,949 |
Assumes 7 percent per year gains on investments after taxes.
If you start out short of the required minimum for investment vehicles with higher rates of return (CDs, mutual funds, bonds, and so on), make it your goal to accumulate the minimum as quickly as possible, and then switch the funds to investments that will grow at 7 percent or higher. You can spend the months required researching investment options.
Slash Entertainment Costs 50 Percent over the Next Six Months
Dinner and drinks out, movie outings, concerts, and cable television may seem essential, but what's essential about paying $4.50 for a drink, $6 for a tub of popcorn, or $600 every year for movie channels you seldom watch? Your entertainment spending may be the easiest part of your budget to cut. Achieving this uncomplicated short-term goal will make you feel great and perhaps motivate you to extend the cutback and allocate the savings to your retirement plan.
