All of us wish to be financially fit, lessen our debt burden, build and maintain a good credit score. However, a majority of people find it difficult to set the right financial goals. For those who do set goals, achieving them is not as easy as it seems. While there are many platforms like Paisabazaar that allow you to track your financial health and take better decisions related to money and debt, not everyone makes good use of such services.
One of the most common reasons why it is difficult to achieve long-term financial goals is the lack of motivation. Experts suggest that one should start with short-term financial goals as they are easier to achieve and small wins will keep you motivated.
So, here we will talk about 5 short-term financial goals that you can set and try to achieve within a period of 1 to 3 months.
1.Catch up on late payments
Late payments or missed payments are the most common financial mistake and the most expensive one too. Late fees and penalties, especially on credit cards, escalate quickly and it is easy for your payments to go out of hand when penalties keep adding up. This is why the first goal should be to catch up on your late payments and pay them off. If it is not possible to pay off the entire delayed balances, you can try to reduce the same by dedicating more of your funds towards such pay off. You may also add to your income by taking up freelance projects, if possible. When late payments are in check, you will have a lot less financial burden on your shoulders.
2.Cut costs on three spend categories
You should try to find ways to reduce the amount you spend on at least three categories. For example, let us say your monthly spends are usually made up of utility bills, food and dining, transport, rent, lifestyle purchases, fuel, groceries and travel. Among these, it may be difficult to reduce the spending on certain categories like rent, utilities or groceries. However, there are other categories where you may have some room to reduce the amount spent. You may reduce your dining spends by cooking your lunch/dinner. You may choose to take public transport. This will reduce your fuel bills as well as the daily commute costs, if you take costlier means such as cabs. Choose any three categories as per your preferences and work towards reducing them.
3.Create a monthly budget
For some people, setting up a monthly budget and sticking to it may seem like a restricted way of living. However, creating a budget is not just about sticking to a number, it is also important to get an insight into how much you are spending each month and on which categories. So, do not look at budgets as a spending plan but a way to identify areas and be more aware of your money habits.
4.Reduce your credit utilization ratio
Although credit utilization ratio might take longer than 3 months to improve, you can start working towards the same as a short-term financial goal. Credit Utilization Ratio (CUR) reflects the amount of available credit that you have used. For example, if you have 2 credit cards with credit limits of Rs. 1 Lakh each and your current balance is Rs. 50,000, your CUR will be 25%. When your CUR is too high, say 90%, it shows high reliance on credit and issuers might see you as credit-hungry. Reducing your CUR will be good for your credit score.
5.Start making small investments
Everyone has to start saving for retirement and the sooner you start saving, the better it is. As a part of your short-term goal, you can start an SIP or park a small lump-sum amount in mutual funds or fixed deposit or any other investment avenue. You must also think about tax saving and make plans for the same as per the tax slab you fall in.
Suggested Read: Download Form 15G PDF and How to Fill Form 15G Online
Apart from the above 5 short-term goals, you can also make goals as per your own spending habits and preferences. You may also think of investing or saving to achieve a life goal, say a vacation that you have always wanted.
Short-term goals are easier to achieve and keep you motivated. Therefore, instead of setting a long-term goal that you might not be able to achieve, you should start with goals that make more sense and give you smaller wins.