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If you’ve reached a particular age and can still not plan or achieve your mid-term financial goals, you’ve got our back. It’s time to give a second thought to your situation as it won’t be a cakewalk considering your future.
It’s time to think of your financial goals and start working on investments for mid-term goals. If your bank account doesn’t seem fine, hop onto this guide on mid-term saving goals.
What are Mid-Term Financial Goals?
Mid-term financial goals are the combination of short-term and long-term goals that you wish to achieve within 1-5 years.
Buying a car, starting a business, saving for college, saving for your wedding, buying your dream home, and doing house renovations come under the cap of mid-term goals. When you’re working on your short-term goals and paying off most of your debts to make way for more cash flow into your savings account, that will ultimately benefit your mid-term financial goals.
These are the goals that comprise moderate risks, and you may encounter a few fluctuations or uncertainty considering your expenses, income, and returns.
Why it’s Important to Set Mid-Term Goals?
Mid-term financial goals help you prioritize your goals, offer you the right direction and give you clarity in achieving your goals at different stages of your career or life. Thus, it’s significant to set mid-term goals as they offer you the much-needed motivation to further achieve your short-term goals or long-term goals. Not only this but these goals help you in tracking your progress and give you a helping hand to your long-term goals.
11 Mid-Term Financial Goals and How to Achieve it?
Increase Savings Rate
When you save for your mid-term financial goals, it requires you to have discipline and flexibility. One of the best ways to save or increase savings rates for your medium-term goals is to do automatic transfers to your investment account or savings account from your checking account.
Moreover, you should regularly monitor your progress and be prepared to face any changes in your expenses, or income that may affect your future goals. Let’s say, if you get a bonus or hike in your salary, then you may wish to increase your savings rate or will try paying off more of your recent debts.
Ensure that you choose an investment plan that best fits your time horizon and risk tolerance level. For instance, if your goal is to save money for less than five years, then you can go ahead with a low-risk alternative, including a CD (Certificate of Deposit) or a high-interest savings account.
Save for a Down Payment on a House or Car
You can invest in mutual funds to save something big for buying your dream home or car.
As per the recent study by Zillow, it takes around 11 years for usual homebuyers to save money for a 20% down payment along with the closing costs.
Furthermore, these statistics conclude that Americans save 10% of their earnings to achieve the target of a down payment.
Tip: To buy a home sooner, you could cut this time in half with a 10% down payment.
Also, you can work on side hustles in addition to your full-time job to gather a sooner down payment for your car or home. You can stick to your monthly budget by implementing a 50/30/20 rule that dictates spending 50% of your monthly income on essentials, spending 30% on your nonessentials, and assigning 20% of your income to your savings account.
Cut down on your nonessential spending, including dining, any entertainment-based monthly subscriptions, and more that will save money for your car or home’s down payment.
Pay Down Mid-Interest Debt
For achieving mid-term financial goals, it’s important to pay your mid-interest debt. You can start with your debts with the highest interest rates when you decide to pay off debt.
Paying off high-interest debt will likely provide a better return on your money than almost any investment. When you decide to pay off high-interest debt, it will possibly offer you a better ROI than any other investment.
Another reason to pay down debt encompasses your credit score. If you wish to borrow money shortly, this number (score) plays a significant role, especially when you take out a car loan or go for a mortgage for any other thing.
You can set up a reminder system for yourself to pay your mid-interest debts. You can stick notes on the wall or use a calendar on your phone to pay off debts promptly and achieve your mid-term financial goals.
Build an Emergency Fund
It’s important to build an emergency fund where you should keep your money aside (three to six months of saving) to cover up unforeseen situations or unexpected events, including medical emergencies, etc. An emergency fund acts as a financial umbrella that saves you from debt rain.
Don’t open new credit cards or increase your monthly spending. Instead, work on increasing your saving habit.
Start with short-term goals by saving a minimum of $5 a day, and you can further increase this saving per day, per week, or per month and achieve your mid-term savings goal.
To determine how much you need to save, you can sum up your spending costs every month and then multiply that total amount by the number of months you wish to save money for your emergency fund.
Develop a Budgeting System
First, work on creating a proper budget system and focus on sticking to your self-made one. In this way, you can save more by controlling your expenses, and you’ll finally untick your financial targets.
With the help of budgeting apps, you can avoid spending on unnecessary things, and it also allows you to save funds for investments, along with other essential financial elements, including emergency savings.
With the help of different budgeting apps, such as YNAB, GoodBudget, Stash, Simplifii, Monefy, SoFi, etc. you can track and manage your finances efficiently. Thus, knowing the flow of your money will help you customize your budget using the 50-30-20 budgeting rule. Therefore, the budgeting system offers a detailed view of your expenses and keeps you on the right financial track.
Start a Family Savings Plan
Saving for a family is like investing for the future. Family financial planning isn’t about monthly or daily saving or spending money; instead, it’s about considering your mid-term financial goals.
Additionally, family financial planning can help different families attain their collective and individual goals. Family savings plans help you enjoy materialistic experiences and comfort while achieving financial security in case of unforeseen financial bumps.
Also, considering the retirement savings plan helps you ensure that you never become a financial burden on your children in the future. So, are you ready to work on your family savings plan?
Contribute to a Health Savings Account
HSA or Health Savings Account (HSA) is an account for people with high-deductible health plans (plans with lower premiums and higher deductibles than the usual ones) to save for medical expenses.
Moreover, if you fall under an eligible or desirable health plan, you can easily contribute to your Health Savings Account differently.
You can use Electronic Funds Transfer (EFT) or Electronic Direct Deposit. Moreover, you can make recurring or one-time direct deposits from a linked bank account and, hence, update your RD amounts whenever you want.
People with high-deductible health plans may qualify for HSAs; these two are usually used in combination only. Furthermore, you should meet the eligibility criteria validated by the Internal Revenue Service to qualify for a Health Savings Account, and to be eligible, you must have the following details:
- No other health coverage should be there
- You must have a qualified HDHP
- Shouldn’t be enrolled in Medicare
- You shouldn’t be claimed as dependent on someone else’s tax return.
In all, focusing on health savings accounts will help you achieve your mid-term financial goals.
Also, here you can check out some of the best HSA providers of 2024.
Maintain a healthy Work-Life Balance
As an employee, taking a vacation is an opportunity to alleviate work-related stress and recharge before returning to the office. Vacations also allow you to spend time with your family and friends, helping you create a healthy work-life balance. Financing a vacation is an appropriate example of a financial goal that you can set. Research the travel and accommodation costs and consider the amount of money you may need for food, souvenirs, and sightseeing activities. It can also be helpful to assess your financial status before leaving so you have resources for other priorities in your life.
Review Your Tax-Deductible Expenses
Reviewing your tax-deductible expenses is significant as it helps in reducing the taxable income of taxpayers which ultimately contributes to decreasing their tax liability.
Moreover, the government promotes particular tax deductibles, including homeownership, investing in retirement savings, charitable giving, and making healthcare and education payments as they want people to take an interest in such plans. The reason the government promotes these expenses is that they contribute to personal financial stability along with social welfare and economic growth.
In addition to this, tax deductibles can help people hold back more of their hard-earned money. Also, this act comes under the financial planning you do for yourself and your family.
Revisit Your Credit Reports
The first step is to know what is there in your credit report and how your credit score is performing. Further, you’ll wish to know the importance of a good credit score and how to create a good credit history, which will ultimately help in boosting your credit score.
The categorization of credit scores is as follows;
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Excellent: 800 to 850
In this way, you can analyze your credit reports.
Gift Life Insurance to Your Family
Are you worried about the future of your spouse and children? Then, life insurance is your ultimate guard that offers a financial safety net to your family in case you die prematurely. Additionally, term life insurance is an unproblematic type whereas life insurance is the least expensive form of insurance that helps in meeting the insurance requirements of most people.
If you’re having difficulty with this plan, then an insurance broker can help you find the best price on an insurance policy.
Final Words
Mid-term savings share a common goal which includes cautious financial planning, commitment, and discipline! Whether it’s about saving for the down payment of your home or car, contributing to a health savings account, building an emergency fund, saving for a wedding, home renovation, or any other desire, these goals show you the path to financial success. To make investments for mid-term financial goals, you should work on establishing a clear-cut plan, staying engrossed in your objectives, and efficient budgeting.
