6 Short Term Investment Goals to Keep You on Track to Financial Freedom

By Chika


Last Updated: September 21, 2021


Investing goes beyond setting money aside for the future.

The success of investments is optimized when they are tied to a goal. When investing, there should be a reason attached to it. If there are no goals attached to the investment, it is easy to liquidate it or exit your position.

You can also mistime your investments or put resources in an investment vehicle that would not give you the full returns you deserve.  This article deals with how investors can set short-term to financial goals to secure themselves financially.


What are Short-Term Financial Goals?

Short-term financial goals are those financial objectives you want to achieve within months or a few years.

Some key short-term goals include:

  • setting a budget
  • starting an emergency fund
  • paying off debt

They might be single one-off goals or goals which are tied to larger ones.

Setting short-term financial goals can be a confidence booster because the hardest part of any venture is starting. Short term financial goals are akin to taking baby steps. Once the first steps are achieved, it is easier to take on bigger goals.

Below are 6 short-term financial goals that can put you on track to setting and achieving longer-term goals.

1. Set a budget

Setting a budget is the first step in organizing your finances.

You have to know how much you earn and spend, to determine what percentage of your income you can set aside to invest.

A budget lays out in black and white the state of your finances and what you need to do to improve on them. This normally entails cutting off excess spending.

When you have a grasp of your expenses, then you are better equipped to make informed financial decisions. You would also be able to tailor your lifestyle to suit your proposed budget. Then you can easily recognize the implication of every penny spent if it is taking you towards or drawing you away from your financial goals.

You can create a budget by itemizing your needs and wants and comparing them to your income.

An effective way is prioritizing your expenses so you know those you can do without or reduce expenses on. Numerous apps can help with your budgeting if you are not cut out for the brain-racking that comes with budgeting, such as:

Best budgeting apps (CNBC.com)

2. Increase your savings

After you have set up a budget, the next thing you have to do is figure out ways to increase your savings.

Increasing savings gives you the ammunition to achieve other short-term goals faster and gives you the confidence to take on bigger goals. An effective way of increasing your savings is by aligning them with a specific goal or target.

For example, you can say that you want to contribute a specific sum to your retirement account or save towards a down payment for a new home. Attaching your savings target to a goal enables you to evaluate your progress and make necessary adjustments when you find yourself faltering.

3. Create an emergency fund

One of the factors that prevent people from achieving their short-term goals is emergencies.

These unforeseen circumstances can be a bump on our way to financial independence. Emergencies can make you dip your hand into your funds set aside for investment, thereby setting you back financially.

As such, it is always important to give attention to emergencies and other unforeseen circumstances. Have some funds set aside to take care of these unplanned events. You can even invest your emergency funds in highly liquid instruments like mutual funds so that they earn money while waiting to be used during emergencies.

You can dedicate a certain percentage of your income for emergencies which can be paid bi-weekly, monthly, or quarterly.

4. Pay off credit card debt

If you want to save some extra cash for your short-term goals, then you should prioritize paying off your credit card debt.

Interests paid on credit cards when accumulated create big holes in your pocket. You can use the debt avalanche method which entails paying off those that have the highest interest rates first, then working your way down. If you come into extra cash, you can channel it to paying part of your credit card debt. 

The key here is reducing your interest rates (because they accumulate daily) so that you reduce the overall amount you would pay.

You can also opt for debt consolidation, but this is merely a short-term solution to a long-term problem. While this would reduce the interest rate, you are still indebted which means your goal of financial freedom is still out of reach.

5. Paying off student loans

Student loans can be an obstacle not only to your financial goals but also to the achievement of life milestones.

Many millennials and GenZs are postponing the achievement of life milestones such as getting married, buying a car, or owning a home due to the burden of student loans. Paying off your student loan can be a tough task, but it makes it easier to achieve your financial goals and acts as a signboard for achieving even bigger goals.

One strategy that can help in paying off your student loan is by refinancing.

However, you have to be careful how you go about this as you may incur more expenses and damage your credit score. Stay away from lenders that promise to get rid of all your debt immediately.

Also, keep in mind that refinancing federal student loans with a private lender could lead to the loss of some benefits associated with federal student loans. To check if refinancing is a viable option for you, you can use a refinancing calculator to get a clear picture.

6. Contributing to your retirement fund

Most people believe that contributing towards retirement is a long-term goal.

Yes, it may be, but it starts as a short-term goal because doing so reminds you that one day you would not be as productive as you are. It also helps to delay gratifications and place emphasis on future returns rather than present-day gains.

It also builds patience and tenacity, which are characteristics you need to have if you want to build and keep your wealth in the long term.

Besides, starting early reduces the financial pressure that would come in the later years when you are faced with more responsibilities and living expenses. You can start by contributing a specific amount monthly, then increasing the figure as deemed fit.

If your employer offers a 401(k) it's advisable to contribute at least the same amount as your employer up to your employer’s match. If you don’t have access to a 401(k), you can set up an IRA and start your retirement savings.


The Bottom Line About Short Term Investment Goals

Plans keep you focused and consistent. Without plans, it is easy to get distracted and taken off track. Short-term financial goals are those financial objectives you intend to achieve within the next few months or years.

They include goals such as setting a budget, tracking your expenses, increasing your savings, or starting an emergency fund.

The beauty of short-term financial goals is that they help you internalize the attributes and characteristics necessary for achieving goals. This is because you would be able to observe minute details that affect your objectives and make adjustments.

It's easier to see how your actions affect your short-term goals than your long-term goals.

Short-term goals also act as springboards for the achievement of long-term goals. In fact, your long-term goals would be easier to attain if you set out to pursue your short-term goals judiciously.

As they say, the devil is in the details, take care of the small issues and the big ones will sort themselves out. This statement is very true of your finances.

Photo by Josh Appel on Unsplash


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