Updated on 09.08.15

Setting and Reaching Short Term Personal Finance Goals

Trent Hamm

As I mentioned earlier this week, right now we are focused on saving for a number of short term goals, mostly related to properly outfitting our house once we move in. We currently have minimal furniture and minimal appliances as well, so we are going to have a lot of needs when we first move in. We’re saving for a couch, two chairs, a full range of kitchen appliances, a washer and dryer, and a deep freezer. We’re quite willing to invest well in these up front in order to get reliable, quality models with a lower cost of ownership and we also have no interest at all in buying on credit, so our short term personal finance goals are pretty clear: save a lot for appliances.

What’s a short term goal? Short term personal finance goals are goals that you can reach within a single year, such as saving for a car down payment, buying an appliance, or similar goals. These goals usually involve saving for a significant purchase that is outside of the realm of ordinary household spending.

What sets a short term goal apart from other goals? First of all, the objective is smaller. Usually, a short term goal revolves around a fairly small objective, one that you can usually define down to the dollar in advance if you do some research. Also, the timeframe is shorter and tighter. You likely have a pretty firm target date for accomplishing this goal.

These two factors combine to spell out a pretty solid plan for tackling any short term personal finance goal.

Develop a very strong plan with weekly milestones. Figure out how much you need to save per week in order to meet your goal. Even if the deposits aren’t weekly, know what you need to do every week to meet your target. For some, it may even be worthwhile to take a daily perspective on saving. If it works for you, define each of these milestones as microgoals.

Keep the savings liquid. Don’t tie it up anywhere. High-interest savings accounts are the perfect place to put money that is being saved for a goal like this. Do not invest short term savings money into stocks (they work better over the long term) or items that are hard to free up, like CDs.

Make it automatic. When you set up the savings account, set up an automatic plan that will pull in the appropriate amount each week. This way, you don’t have to worry about it – it just happens. Then, when the time comes, you have what you need in a very liquid form – just withdraw it and go.

Here’s an example. My wife and I set up an account that we defined as our “settling-in” fund. This fund is intended to just buy all of the appliances and furniture that we’re going to need when we move in. Several months ago, we did the research and made some preliminary picks of what we wanted with the assumption that the house will come with no appliances and furniture, then we added up the costs and started saving about $125 a week towards this goal. As we approach the time to move, this fund is looking like one of the best ideas we’ve ever conceived of, because right when we move in, we’re going to go on an appliance/furniture buying spree – and pay for all of it in cash.

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  1. stayfly says:

    great article

  2. Jeremy says:


    I enjoy reading your articles from time to time, and agree with most of your points.

    One I don’t, however, is this focus of yours on buying a house sooner rather than later. A house is the biggest investment most people ever make, and usually it is a good one. However, the last five or six years have brought housing prices way out of line with a 100+ year historical trend.

    Prices are already falling, and will continue to fall (in real if not nominal terms) until prices fall back to a long trend affordability levels… in the meantime countless people will lose their homes to foreclosures, voluntarily or otherwise.

    During this process you will be able to buy the nice new furniture you have been saving up for at greatly reduced prices… as long as you are willing to buy ‘used’ (ie 1-3 years old). Craigslist, yard sales, ebay, you name it, it will be available. And as housing prices fall lower and lower, more and more of these second hand high quality appliances will become available.

    Do yourself a favor and read up on why current housing prices (although lower than ’05/’06) are unsustainable. In the meantime, just keep doing what you’re doing.

  3. Cullen says:

    Trent, Like the advice about not tying up your short term money in CDs or Stocks, but keeping it in a high yield money market account or something equivalent. I enjoy your blog and just started my own aimed at student investors. I plan on linking to some of your articles, if not your entire blog. Thanks, look forward to hearing more from you.

  4. Susan Lisk says:

    I enjoyed your podcast and have been a subscriber for a number of months. I would like to point out to you that you can buy wonderful furniture and appliances for very little money at auctions.When our children were in college we bought lots of nice pieces for their apartments.My husband and I have been living frugally for the past 15 years buying things we need at garage sales and auctions and have been saving a bundle.Too bad we didn’t start sooner! I love your website.~ Sue

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