Saving for Your Short-Term Goals

How Much Is Enough?

You may know your financial goals, their deadlines and how much you need to save for them, but now the question is, "How much do I save right now to reach my goals on time?"

The answer involves micro-goals. That’s when you take a bigger goal, even a short-term one, and break it up into smaller, more manageable parts.

Let’s say you want to buy a used car for $6,000 in a year and a half. You can split up your goal into monthly chunks, so you save about $330 each month. Hitting a $330 micro-goal each month seems much less daunting than trying to raise thousands of dollars across 18 months. You can even break up the goals further so that you aim to save about $77 each week. Making constant progress toward a specific deadline is a great way to stay motivated about your goals.

Choosing Your Savings Vehicle

You have a few different options for how you can save your money. Here are a few that work well for short-term goals:

•  Savings account: You can deposit money at any time, and withdrawals not done in person are limited to help prevent impulsive spending, making them great for emergency funds. They even earn a modest amount of interest and are federally insured, which your piggy bank and mattress can’t offer.
•  Money market account: Similar to a standard savings account, money market accounts primarily differ with interest rates (which may be higher) and the ability to write checks. Just be aware that you’re still limited in your number of monthly withdrawals that aren’t done in person. 
•  Certificate: Certificates can earn you a higher interest rate, though to withdraw money without a penalty, the certificate must reach its “maturity date.” This makes certificates better suited for goals that won’t need funding until a specific date that’s a few months or years away.

Bringing In Extra Income

Sometimes, even when you’re a financial pro, you can’t afford to save for all your financial goals. If you have the time, you can bring in extra income with a side job. These jobs usually involve working a flexible schedule at a greater hourly rate than many part-time jobs in the market. However, many of these jobs also require special training or licensing, so be aware of extra expenses that come with the territory. Below are a few side jobs you may consider:

Cut Expenses Temporarily

An alternative—or supplement—to earning more is to spend less. If you’re used to the occasional splurge or a few of the finer things in life, this can be hard, but cutting back a bit now may be what you need so you can make that emergency fund, vacation or car a reality. Here are a few ways you can cut expenses quickly and temporarily:

•  Carpool to work. Do you live near any of your co-workers? Commuting together can save you money on gas and reduce the wear and tear on your car.
•  Put your gym membership on hold. Are you regularly using that gym membership? You may be able to get the exercise you need at home or outside for free.
•  Cook your own food. Find yourself eating out or ordering in on a regular basis? Making food at home can be a huge cost-saver and doesn’t have to take much time. Try making batches of food to reheat as leftovers or making simpler recipes that require less prep time.
•  Do more yourself. Do you pay someone to clean your house, mow your lawn, groom your dog or perform any service that doesn’t require special training? It may be more time-consuming, but you’ll save money by doing these chores yourself. 
•  Adjust the thermostat. When you aren’t home, set your thermostat 7 to 10 degrees higher in the summer and do the opposite in the winter. According to the U.S. Department of Energy, this can save you as much as 10 percent a year on energy costs. You can save even more by adjusting the temperature when you're home. For example, in the winter, you could put on a sweater and lower your temperature from 72 to 67 degrees.