In any given year, you are working toward a list of short-term savings goals. These may include your next vacation, monthly utility payments, and contributions to your rainy day fund, among other things. If you have ever struggled to balance saving for short-term goals and staying motivated to save for the long term, you’re not alone. The good news is that managing long-term and short-term savings goals at the same time is easier than you think.
Many of us think about our finances on a linear timeline with immediate expenses at the beginning and future savings goals at the end. Looking at this timeline, you’d think that saving for retirement doesn’t begin until later in life, but we know that’s not the case (though it’s never too late to start saving). The key is to focus on your long-term savings goals in the same way that you prioritize your short-term savings goals.
Staying motivated to save toward your long-term savings goals can be tough, especially when you have more immediate needs in front of you. The secret to balancing your long-term and short-term savings goals is to divide your long-term goals into short-term benchmarks.
Here are a few examples of how this savings strategy can work for you.
Make your student loans payments, prepare for retirement. You have been diligently paying off your student loans since graduating from college. Maybe you are taking one long-term savings goal at a time, but why wait to start saving for retirement? Set a retirement savings benchmark for the year and work toward it as you budget for your student loan repayment
Pay your rent, work toward your first home. It’s never too early to start saving for your first home, even if you plan to continue renting for a few years. Setting a little extra money aside with each monthly rent payment can set you far ahead when it comes time to make a down payment. Set savings benchmarks each year of your lease to stay motivated to save toward your first home.
Plan your vacation, save for college. Getting ready to take your child on their first family vacation is exciting. As you budget for transportation, lodging, food and more, your kids’ college savings plan may take a backseat. Rather than setting your long-term goals aside, set a realistic benchmark for the month, such as saving the equivalent of a textbook or two and adding it to their college savings plan.
Assigning tangible benchmarks to your long-term savings goals can help inspire you to continue saving, even while your immediate needs are front and center. Thinking about these benchmarks as short-term savings goals can help you build a map for your financial journey. Find more savings tips to help you reach your goals on the FutureTrack Blog.