Advance America: How Short-Term Financial Goals Can Help People Make the Most Out of 2021

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May 13, 2021, 09:00 ET

LOS ANGELES, May 13, 2021 /PRNewswire/ -- One of the most popular New Year's Resolutions is to improve finances. Thus, at the start of every year, plenty of people set their own money-related goals.

Long-term financial goals are excellent to have. However, short-term goals are just as important. They help improve people's financial situations in the present while providing quick wins to build momentum.

With that in mind, here are some short-term financial goals to help people make the most out of their year.

Create a Budget

Creating a budget is perhaps the fastest goal one can accomplish, as one can knock it out within a day.

To make a budget, start by looking at the past few months of income and expenses to get an average. Income is similar each month for most people but may vary for people who work in the gig economy, and expenses can change a lot month over month, which is why it's good to make an average.

With a budget in place, people have a spending plan. Also, the budget helps monitor where dollars are going to prevent accidental overspending.

Cut Spending on Two Specific Categories

People looking to get their finances in order can snag some quick wins by cutting costs in their budgets.

However, trying to cut too much at once may be a dramatic shift.

Instead, people can make it their goal to lower spending in two specific categories at most. For example, one could cut down their weekly restaurant visits and cancel one subscription service. That's instant money back into their pockets.

Building an Emergency Fund

In the wake of a global pandemic and multiple weather emergencies, the importance of being prepared for turmoil has come to the forefront of people's minds.

One of the best ways to be prepared — at least financially — is to have an emergency fund.

Most recommend saving three to six months of expenses in a high-yield savings account. This provides plenty of monetary cushion in case of job loss, car accidents, family emergencies, and more. Plus, the high interest rate helps the saver keep up with inflation.

Pay Off One Medical Bill or Credit Card

Having several debts to pay off is daunting. Paying them down is often a long-term effort.

However, people can break down this long-term debt-free goal into individual debts. From there, they can start with the easiest debt to pay off. This will immediately save them on interest and help them build momentum towards paying the other debts.

Jump-Start Retirement Savings

Retirement is the longest-term goal for most people, but individuals can make it a short-term goal to start if they haven't.

For some, that might mean speaking with their HR department at work to learn about opening their workplace retirement plan (such as a 401(k)) and getting the matching bonus. Once set up, contributions are deducted from the employee's paycheck, making this goal simple.

People who are diligently contributing to their workplace plan already should consider opening an Individual Retirement Account. No need to hit the contribution limit right away — simply opening the account and putting just a few bucks in is a great start.

Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.

SOURCE Advance America