Short term goals and their significance to your entire budget
November 02, 2015
"If you fail to plan, you are planning to fail." -Benjamin Franklin
What is it about that quote that makes planners smile and, well, the rest of us cringe. I am not a person who considers myself a planner... I like to call it 'going with the flow.' However, I have to admit the quote does apply to finance. Let's face it if you could become a millionaire by going with the flow, there would be more happy people walking around!
A short term goal can be defined as any goal less than a year. A year is a long time and a lot can change in regards to our finances. The head of the household could become disabled and suffer a loss of income. A car accident could leave one's only means of transportation completely totaled. A healthy bull stock market could quickly become a nail-biting bear stock market, in a second. Alternatively,, you could win the lottery.
In the above examples, every single one would of them would impact your household budget significantly. I believe that short term goals are crucial to your economic health.
Not just one short term goal, two bi-annual goals or four quarterly goals are going to make the difference between where you are today and where you want to be tomorrow.
Take it from a non-planner: these short term goals will change your financial future.
I suggest having a monthly savings goal that is consistent with your monthly budget. Factor a cushion into your budget to ensure that your goal is obtainable... should a natural disaster take place.
I suggest having weekly goals, for every week of the entire year. Once a week cross reference all of your bank transactions with what you remembered to take off of your checkbook. Often times you will realize that you may have forgotten to deduct a transaction here or there.
I suggest having a daily goal of recording every single household-transaction from an app on your phone or from your checkbook. This way you know from day to day how you are doing on your weekly budget.
Long term goals are easy. Stating that you want to be a millionaire by a certain age is a long term goal. However, the short term goals are the ones that are going to tell you how you're going to get there!
Remember to periodically reward yourself for consistently meeting your short term goals.
Guest contributor: Mandi Furness, AFC®