6 Short Term Financial Goals Newlyweds Should Set Now
Newlywed couples typically bring their financial lives together, and it’s wise to set goals to help keep you both on the same page. While many couples focus on long-term targets – like buying a home or retiring – it’s wise to pick some objectives with a quicker timeline, too. If you aren’t sure where to begin, here are six short-term financial goals for newlyweds that can serve as an excellent starting point.
1. Create an Emergency Fund
If neither partner brought a solid emergency fund into the marriage, creating one should be a top priority. With an emergency fund, you have a financial cushion that helps you weather the unexpected. Whether it’s an unanticipated car repair, medical bill, or period of unemployment, you won’t have to turn to debt to cover the cost.
As a first step toward a healthy emergency fund, aim to get either $1,000 or enough to cover both your auto and home or renter’s insurance deductibles, whichever is higher. Once you have that in place, make the next target one month of living expenses. After that, get three months of living expenses set aside, and then work your way toward six.
Ideally, your timeline for the initial $1,000 should be as short as possible. Once that’s hit, you can choose a new deadline for the next target based on your ability to save.
2. Get a Workable Budget
A short-term goal that’s often easy to achieve is creating a workable budget for your new household. This step is critical, particularly if you weren’t previously living with your new spouse or are adjusting your finances after the wedding. A budget lets you get on the same page regarding how expenses and debts are addressed. Plus, it can prevent missed payments, as it gives you a functional roadmap.
Just keep in mind that a budget is a living document. You may need to adjust it monthly over the course of a year or two to get it to the right place. After that, you can review it quarterly to ensure it’s still working, as well as update it when there’s a major change, such as a raise, the birth of a child, or anything else that alters your financial picture.
3. Pay Off Debt
Debt can wreak havoc on your budget and financial health, which is why paying down anything you or your spouse owe as quickly as possible is wise. By tackling debt faster than required, you’ll spend less in interest. Plus, you may be able to eliminate monthly payments, giving you more room in your budget.
Technically, paying off debt could be a short or long-term goal, depending on how much you owe as a couple and your income levels. However, you can always set a doable short-term target to get you moving in the right direction. For example, you can select a single debt and set a deadline for paying it off in the near future. Alternatively, you could go for a debt reduction of a particular percentage based on the current balances.
4. Max Out Your Retirement Contributions
This is a goal that you likely want to pursue through the rest of your working years. However, getting to the point where you’re maxing out your retirement contributions can qualify as a short-term goal. Essentially, you want to determine how much you’re allowed to set aside and work to reach that maximum amount as quickly as possible.
If reaching the contribution limit proves challenging, then selecting a different target as a starting point can at least get you moving in the right direction. For example, you can aim to contribute enough to an employer-sponsored retirement account to get the maximum match from the company. Once you hit that target, you can set a new short-term goal that brings you even closer to the contribution limit, essentially tackling it in chunks until you max out your retirement.
5. Save for a Vacation
If you want to celebrate your one-year wedding anniversary in style, a wise short-term goal to set is to save up for a vacation. Consider where you’d like to go, what you want to do at the destination, and how much it’ll cost to cover transportation, accommodations, attractions, and meals. Then, break that down by the number of paychecks you have between now and when you’d need to book the trip, giving you a specific amount to set aside.
The nice part about this goal is that it’s repeatable every year. It’s a simple approach to ensure you can do something fun together every anniversary or for another special occasion, like a particular holiday. Plus, it’s a goal that’s enjoyable, as it gives you something to look forward to each year.
6. Eliminate $1,000 in Spending
If you want to get your household spending under control, a simple short-term goal to set is to eliminate $1,000 in annual spending. Since the target isn’t overly high, even small reductions that don’t impact your day-to-day dramatically can potentially be enough. For example, you could cancel lesser-used streaming services, get a lower-cost cell phone plan, choose more affordable insurance providers, and take other similar steps to reach the target. After all, you only need to reduce your spending by about $83 per month to reach the goal in 12 months, so a few minor changes could do the trick.
Whenever you cut an expense, consider putting the money you would have spent into savings. It could go toward your emergency fund or another financial goal. Alternatively, you could use the cash to tackle debts faster, allowing you to reduce your expenses even further.
Do you know of any other short-term financial goals newlyweds should set now? Do you have any tips that can make reaching the targets above easier for couples? Share your thoughts in the comments below.
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