Redefine Your Saving Goals
What are your financial and saving goals?
That’s the first question one should ask itself. Your ideal, long-term savings goals will determine your optimal savings rate. Thus, it is important to have these short and long-term plans in mind. Let’s check them.
Short-term saving goals
These short-term goals are the saving goals you have for the next year. How much do you want to save in the following year and for what? Is it for your Holiday vacation or maybe buying some house appliances?
It can also be a goal for paying your debt or increasing your emergency fund. This will most likely depend on your and your family’s needs. However, these goals should be achievable in the next year.
Long-term saving goals
Long-term saving goals are usually goals that you have in mind for the next five to ten years. This can be saving for buying a house, paying off a mortgage, or saving for your child’s college.
Achieving these goals might take years or perhaps decades. Compared to short-term ones, your distant goals require more funding and consistent attention.
Mid-term saving goals
The two groups we just mentioned, frequently overlap, which can lead to confusion. These types of financial savings fall in between your long-term and short-term plans. They do not require much time but they require more time than short-term goals.
In this category, you can have savings for buying a car, for a down payment, or something similar.