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 good decisions today. Your successful long-term financial plan needs a successful short-term financial plan, and it all starts this this fabulous tool that we use.
Your 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 one to three big financial goals like saving for retirement, saving for a trip around the world or leaving an inheritance. Email us if you need heirs. So, your rocks are your big financial goals, and they typically take five or more years to achieve.
Your pebbles are your financial goals that take three to five years to achieve. These could be maxing out your retirement contributions or doubling your mortgage payments. 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. 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.
1) Set one or two short-term Q.U.E.E.R. goals to support your long-term Q.U.E.E.R. goals
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
No shit, Shirley Temple, you’re saying. Don’t fret! We’re here for you. Listen to this Queer Money™ episode to hear how to improve your cash flow, including how to increase your income.
Put all your extra money from your decreased expenses and increased income towards your short-term financial plan. Our dynamic budget will help you manage all this new-found money. Click here to get our exclusive budget.
3) Go 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.
Put all your extra savings towards your short-term financial plan.
4) Have a Fabulous Social Life plan
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 Planner. The Internet makes using our Fabulous Social Life Planner easy. The internet and apps are great ways learn what’s going on, the costs and possible discounts or promotions for fun, free and cheap NSE activities.
Again, put any savings from your Fabulous Social Life planning towards your short-term financial plan.
5) 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.
6) Regularly review your budget and cash flow
Don’t create a budget and walk away like I’m walking away from this cake. Your budget and cash flow need ongoing attention to make your long- and short-term financial plan winners.
Each payday we review our income and expenses, and we pay all our bills. So, most bills are paid early, and no bills are late. We, also, review our cash flow each payday because some expenses fluctuate from month to month. Click here to get the same, dynamic budget we use to spend less than we earn and put our savings towards our financial goals.
Use these six steps for your short-term financial plan and marry them to your long-term financial plan.
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