Three Steps to Help Save for Short-Term Goals

  Pursuing short-term financial goals - those that you’d like to achieve within one to five years, such as a down payment on a home or car - can require a different strategy than pursuing long-term goals.  Here are some steps to help you save and invest when you’re going to need your money sooner rather than later.

   Step 1:  Be specific about your goal.  Setting a specific short-term goal will help you to evaluate your progress toward meeting it. For instance, the vague objective “I want to save money to buy a house” becomes “I want to save $25,000 over five years to put toward the down payment of a house in (town/city).”

   Step 2:  Take steps to free up extra cash.  How will you save the money that you need?  Eating out less often, cancelling a gym membership that you don’t use, or downgrading your cable from a premium to a basic plan could easily free up $100 per month or more toward your goal.  There are probably many areas where you can save a few bucks.  Make a detailed list of what you spend in an average month and see where you could afford to trim.

   Step 3:  Match your investments or savings vehicles with your goal.  Safety and liquidity will be priorities if you need the money within a few years.  Stocks can experience extreme fluctuations over short-term p ...