When was the last time you saved for a short-term goal?
Chances are, when you think of saving for something, you think of the long-term things. Saving up for a down payment on a house. Preparing for a dream vacation. Investing for retirement.
But there’s a good reason to save up for short-term goals. Too often we don’t plan ahead for the short-term purchases we make. Instead, we rely on credit cards to buy those items — and that can lead to debt.
Creating short-term goals can be a great way to ensure that you remain on top of your finances and still have access to some of the things you want.
What are some examples of short-term goals?
In general, short-term goals are those that you can accomplish in less than a year. Much of the time, we don’t think about saving up for these things. When it’s time to buy a TV or a laptop, we tend to pull out the credit card and make those purchases immediately.
Unfortunately, that can lead to debt if you aren’t prepared to pay off the credit card immediately. You wind up paying a high rate of interest and carrying a balance indefinitely.
Short-term goals are designed to help you plan ahead for those types of purchases. Whether you hope for a three-day getaway or you just want to make sure you aren’t going into debt to buy that new refrigerator, setting short-term goals can help.
Create multiple accounts
One of the cool things about online banking is the fact that you can manage your money in new and creative ways.
It’s possible to set up sub-accounts with most savings accounts, and name these according to your goals. This is a great way to funnel money towards different needs and make sure you’re accomplishing what you want.
I like to create accounts for items I know I will use regularly. One of my sub-accounts is set up to help me save for quarterly taxes. Another is used to pay for short getaways. I like to travel on weekends, and that means hotel, food, and transportation costs — a sub-account designed for me to put money aside each month helps me with those goals.
You can do the same. Do you want to save up for a new computer? Create a sub-account for tech upgrades. Once you buy the computer, use the account to start a short-term savings goal for a new smartphone.
As long as you have generic names for your sub-accounts, you can rotate your goals. Whether you want to replace your kitchen appliances or buy a new bedroom set, you can use household sub-accounts to save for your short-term goals in turn.
Small amounts of money accomplish short-term financial goals
You don’t need a lot of money to start saving for short-term goals.
If you want to buy a TV for $750, set aside $75 each month for 10 months to reach your goal. I have a friend who sets aside $20 a month in a sub-account for each of her three kids for 10 months of the year. At the end of that 10 months, she has $200 to buy each of them holiday presents.
You can even fund multiple accounts at once, depending on what you hope to accomplish. I put $50 every two weeks into accounts for repairs, technology, and short-term travel. It’s one way for me to regularly save up for short-term financial goals without breaking the bank.
If you use credit cards for travel hacking or other rewards programs, you can still incorporate credit cards into your short-term savings plan. Once you’ve saved enough, purchase the item with a credit card, then go home and immediately pay off the balance using the money you previously saved.
The key to making this work is planning ahead. You have to be willing to plan six to 12 months in advance for your short-term goals. Think ahead to what you might need, even before you need it.
I generally plan to buy a new laptop every two years. After I’ve had a laptop for about a year, I start diverting some of my discretionary income toward a technology sub-account. That way, when I’m ready to make my purchase, the money is already in the account.
Break it down into even smaller chunks to help you better manage expectations. You might feel like saving $200 a month is a tough sell. But can you come up with $50 a week? What about $10 each weekday? If you can break down the costs a little bit, it suddenly becomes doable.
Stay on track by making it automatic. My short-term savings for quarterly taxes are transferred from my checking account to the savings sub-account every month like clockwork. My travel fund is replenished every month. All of my savings goals are automatically funded every week, two weeks, or month, depending on the account.
You’re more likely to reach your short-term financial goals if you make the whole thing automatic. Work out your cash flow, and then save automatically each month.
Savings goals aren’t just meant for huge, long-term endeavors. You can break your short-term goals down as well. Make it a point to save a little bit toward all of your goals each week, and you might be surprised at how quickly you can reach your objectives.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.81% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|