5 Steps to Make a Short-Term Financial Plan

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Your short-term financial plan is your success plan

Where you are today is the result of decisions you made yesterday. Be where you want tomorrow by making a good short-term financial plan today. Reach all your financial goals easier with the free 7-Step Credit Card Debt Slasher here.

The value of a short-term financial plan

Continuing our rocks, pebbles and sand analogy, today we’re all about your short-term financial plan. Like Mariah Carey to Nick Cannon, your short-term financial plan supports your long-term financial plan.

Your rocks are your three to five big financial goals like having enough money for retirement, global travel or leaving an inheritance. Email us if you need heirs. So, your rocks are your big financial goals, and they typically take 10 or more years to achieve.

Your pebbles are your financial goals that take three to 10 years to achieve. They may include maxing out your 401(k) contributions each year, buying an appropriate sized and priced home for your life goals (your rocks) or paying for your kid’s college education. These short-term goals support your long-term goals.

For example, if you want to retire by 65 (long-term goal), annually maxing out your retirement plan contributions (short-term goal) for the next five+ years will make that happen more easily. After these three to five years, you might continue maxing out your retirement contributions. Cross that bridge when you get to it. The idea is to cut your rocks into pebbles.

So, let’s chisel.

Hear how to make your short-term financial plan:

5 steps to make your short-term financial plan

1. Pick 1 – 3 short-term Q.U.E.E.R. money goals to support each long-term goal

You can’t eat a piece of chocolate cake in one bite, at least not the sizes we eat. It’s best to take small bites and savor each one (I might want cake). Similarly, achieve your long-term goal with supportive short-term goals.

For example, if you want to increase your net worth to $500,000 (long-term goal), you may need to both pay off debt and increase savings. Two worthwhile short-term goals to support your long-term goal are to invest an extra $100 a month in a retirement account and rebalance your portfolio semi-annually.

2. Improve your cash flow

If you eat too much cake while sitting on the couch with a glass of wine, as I want to, you’ll gain weight because you’ll have more calories going in than going out. Likewise, saving money is about more money coming in than going out.

This is a velvety-chocolaty way of saying spend less than you make and put the difference towards your short-term financial plan. There are three steps to do this:

Increase your income
Decrease your expenses
Put your increased income and savings towards your short-term financial plan

As Paula Pant says, “Grow the gap.” For help growing the gap, listen to Queer Money® episode #267: 10 Ways to Find Extra Money.

3. Improve your net worth

Having debt or not having emergency savings makes having long- or short-term financial plans hard. Debt interest eats savings. Emergencies without emergency savings hurt financial goals. Once you pay off your debt, put your monthly payments and interest savings towards your short-term financial plan and emergency savings.

The best way to start paying off credit card debt is with the 7-Step Credit Card Debt Slasher available for free here.

4. Not-so-expensive (NSE)

NSE stands for not-so-expensive and is a super-helpful strategy for living fabulously, not fabulously broke. NSE means to find cheaper alternatives for the things you like and do.

For example, there’s an $80 bottle of wine that would go perfectly with this chocolate cake, but there’s a box of wine that’s also good and serves four bottles-worth of wine at $19. That’s a perfect NSE alternative for my couch-date.

There are NSE alternatives for everything you like and do. You just need to find them. Google, Groupon, Netflix, Living Social and similar sites/apps are your friends.

Spend less than you make and put the difference towards those short-term and long-term financial goals. - David of Debt Free GuysClick To Tweet

Put all your extra savings towards your short-term financial plan.

5. Proactively plan your social life

Not having a financial plan leads to poor decisions. Without healthier alternatives like grapes, I might eat that whole damn cake. If my grocery list includes healthier alternatives, I may make better decisions. One might ask how this illusory cake got into our condo to begin with, and I just don’t know.

Like my diet controls, it’s important to have a monthly plan of NSE activities on your fabulous social life. Click here to get our 5 tips for planning your fabulous gay social life.

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Resources to create your short-term financial plan:

Get more help for your short-term financial plan:

We’re David and John Auten-Schneider, the Debt Free Guys and hosts of the Queer Money® podcast. We help queer people (and allies) live fabulously not fabulously broke by helping them 1) pay off credit card debt, 2) become part- or full-time entrepreneurs and 3) save and invest for retirement.

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