How to Budget to Achieve Short-Term Financial Goals

Summary: Do you struggle to set short-term financial goals? A healthier financial life could be closer than you think. This article provides tips and tricks that can help you set and stick to your personal finance priorities in the short term.

Amid the hustle and bustle of daily life, with its relentless demands and pressures, it’s easy to be overwhelmed by short-term financial goals. Surprisingly, dedicating a mere half hour each week can make a world of difference. From paying off debt to money-savings, you can use this dedicated time to clarify your financial goals and develop a realistic strategy to reach them.

What are short-term financial goals?

Short-term financial goals are typically personal finance goals you can achieve within a couple of months to a couple of years. When you sit down to crunch the numbers, you might be surprised at just how achievable they can be when you are intentional with your money.

While short-term financial goals don’t take a long time to achieve, they can have a big impact on your overall financial health and quality of life. Here are some common goals to get you started.

Build an emergency fund

Traditionally, financial professionals have recommended building an emergency fund of at least 3 to 6 months’ worth of expenses.¹ More recently, some experts have recommended bumping the number up to 12 months.

About 42% of American households don’t have an emergency fund at all.² Start small if you are one of them. For instance, if your finances would allow, aim to save $1,000. Once you achieve this goal, you can bump your goal up to three months, then six month’s worth of expenses. Depending on your risk tolerance, you may even increase the goal up to 12 months to hedge against any future shocks to the job market.

The money you save is meant for a rainy day, not for daily expenses. This emergency fund is best kept in a high-yield savings account or money market account rather than in a certificate of deposit (CD) or investment account. That’s because you want the money to be easily accessible in case of an emergency while still earning a decent interest rate.

Pay off high-interest debt

High-interest debt–like credit card debt–has been on the rise since 2021.³ If you’re starting from scratch, focus on not only building your emergency savings but also paying down your debt. High interest rates can cause long-term financial struggle if you don’t handle things relatively quickly.

There are two principal ways to pay off debt: the avalanche and snowball methods. The avalanche method involves these steps:

• Make a list of all your debts, ranking them by interest rate.
• Pay as much as you can on all accounts every month and pay any extra that you can on the highest-interest debt.
• Once you have the most expensive debt knocked out, apply the money you were using for those payments to the debt with the next highest interest rate.
• Repeat the process until everything’s paid in full.

The debt snowball method is similar, except instead of paying off the highest interest debt first, you’d prioritize the debt with the smallest amount owed.

The avalanche method saves you the most money if you stick to it, but the snowball method gives you quick wins earlier on. The joy of achieving those small goals at a quicker pace may help you stick to the plan over a longer period.

Save for a vacation

Doing responsible things with your money, like building an emergency fund and paying off debt, is important. But you can use your money for fun short-term financial goals.

Family vacations are a great way to build memories with your loved ones, and can provide some much-needed reprieve from the grind of daily life. But, they do cost money.

Here’s how you can plan financially for a vacation:

• Calculate how much you would need for accommodations, food, transit, and entertainment at your chosen destination.
• Account for the cost of airfare or gas to get there.
• Once you have the total cost, divide it by the number of months you have to save. Let’s say you’re saving for a vacation eight months away and need $3,000; you’ll need to save $375 each month.
• Consider automated transfers from your checking to savings account each payday. This reduces the chance of spending the money elsewhere.

Renovate your home

You can save for home renovations the same way you would for a family vacation. Whether you need to build an addition or give your kitchen a makeover, take the total amount you need for home renovations and divide it by the amount you can reasonably save per month.

Let’s assume you have a $10,000 renovation and you can reasonably save $1,000 per month. You can achieve your goal in 10 months.
However, it’s important to keep these things in mind:

• Don’t overlook potential money-savings strategies like tax credits.
• If you’re using greener technology in your project, tax credits and rebates will be beneficial.
• Depending on your state and area median income, the HEAR program may help you get a discount on various electrical home appliances, like a water heater or electric stove. This could help you reduce the cost of renovation, reducing the amount you need to save.

Purchase life insurance

You might think life insurance is unnecessary now, but purchasing it sooner rather than later lowers your costs. Applying for life insurance can be a relatively simple process, and building it into your budget is a short-term financial goal that can help protect your loved ones if something bad happens to you.

Your short-term financial goals are achievable

Whether you want to learn more about investing, set your family up with a sturdy life insurance policy, or simply build a budget that allows you to afford quality time together with your children, you can achieve your financial goals if you plan and stay disciplined.

If you need help building a budget or a personalized strategy that includes your short-, medium- and long-term goals, the financial professionals at Mutual of Omaha can help.

Frequently Asked Questions

Q1: What are long-term financial goals?

Long-term financial goals are achievements that will take you decades to accomplish. They can include things like saving for retirement, saving for your child’s education with a 529 account, or building a financial legacy to leave to your children in your will.

Q2: What are medium-term financial goals?

Medium-term financial goals might take you 3 to 10 years to achieve. They’re not necessarily things you can get done in the immediate future, but they’re not as long-term as goals like funding your retirement.

Q3: What are examples of medium-term financial goals?

Medium-term financial goals include saving for a down payment on a house. Paying off your mortgage or student loans, and putting aside seed money to start a business can be classified as medium-term financial goals.
Sources

1. Nerdwallet, Emergency Fund Calculator: How Much Will Protect You? April 2025
2. S. News, Survey: 42% of Americans Don’t Have an Emergency Fund, January 2025
3. com, Average consumer now carries $6329 in credit card debt, August 2024

Disclosure:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

All investing involves risk, including the possible loss of principal and there can be no assurance that any investment strategy will be successful.

638754