How to plan for short- and long-term saving goals

Timing is a key component of any practical savings plan. But not all savings goals are the same, and the time frame for a certain goal makes all the difference in how you'll achieve it. A goal that's five years out will likely have a different approach than one that's 10 to 20 years in the future. You'll usually see financial goals categorized into three timeframes:

Short-term goals: One year or less

Midterm goals: One to five years

Long-term goals: More than five years

Planning your savings strategy starts with understanding the timeline for your goals. Whether you're saving for a vacation next year or preparing for retirement decades from now, having a clear plan can make all the difference. With tools like the Citizens Savings Tracker®¹, you can easily set and monitor your financial objectives. Let's explore how to effectively save for short-term, midterm, and long-term goals.

What's a good savings goal?

A good savings goal depends on where you are in life and your current financial situation. It’s not about comparing yourself to others; it’s about identifying what’s most important to you. Common savings goals include:

• Building an emergency fund
• Saving up to buy a home
• Paying off credit card debt
• Funding your child’s education
• Saving for retirement

To determine a good savings goal:

1. Factor in your income, expenses and timeline
2. Set up a budget
3. Use financial tools, like Citizens Savings Tracker® to help you stay on track

Remember, it's not about how much you earn but how well you manage and allocate your resources that could lead to a successful savings goal. And keep in mind that the best saving strategy is the one that works best for you.

Planning for short-term financial goals

Since short-term financial goals are those you can reach within a year, examples include:

• Establishing an emergency fund
• Saving for a purchase, such as a new TV or upgraded appliance
• Paying off a small amount of debt

When saving for a short-term goal, keep your money as liquid as possible so you can easily access it. A savings account, money market account or certificate of deposit (CD) account are usually best. Money market accounts and CD accounts typically don't have the same returns as investment accounts but usually have higher interest rates than traditional savings accounts.

Planning for midterm financial goals

Since midterm financial goals can take up to five years to achieve, some common examples might include:

• Paying off student loans or other larger debts
• Saving for a down payment on a home
• Planning a renovation on a home

Traditional savings accounts, money market accounts, CD accounts and bonds are all good ways to save for midterm goals.

Bonus tip: Tools like Citizens Savings Tracker® can help you visualize your midterm goals and track progress over time.

Planning for long-term financial goals

Look five to 20 years into your future, and that's where your long-term goals sit. Examples include:

• Saving for retirement
• Funding your current preschooler's college education
• Buying a second home
• Taking your family on a once-in-a-lifetime vacation

Since you won't need the money for a long-term goal until years in the future, you can usually invest it in less liquid options, including the stock market, mutual funds or even real estate. These investments typically earn a higher rate of return than savings accounts but don't have FDIC insurance, so they can lose value. The investment accounts used to save for long-term goals, such as a 401(k) or IRA for retirement have tax advantages.

Setting up financial goals by age

Your financial goals will likely vary based on your age, and you can also adjust them over time. After all, a long-term goal to save for retirement isn't as long term as you approach retirement age. Here are some examples of financial goals you might work toward during different life stages.

Financial goals in your 20s

When you're fresh out of college, your financial goals might include:

• Establishing financial independence from your parents
• Paying down student debt and other bills like car payments
• Starting to save for retirement so compound interest can add up over time
• Building a good credit score
• Setting up an emergency fund

Financial goals in your 30s and 40s

As you reach your 30s and 40s, your financial goals might include:

• Paying off your student loans
• Taking financial steps before expanding your family
• Saving for your child's education
• Increasing your retirement savings, aiming to save one year's worth of your salary by age 30 and three times your salary by age 40
• Establishing a more robust emergency fund
• Creating a diversified portfolio of investments

Financial goals in your 50s and 60s

When you're in your 50s and 60s, your financial goals might include:

• Planning for retirement expenses as it gets closer
• Making catch-up contributions to your retirement accounts
• Helping with funding your family's milestones, like a wedding or graduation trip

Your financial goals at each age may vary based on your life circumstances. Some financial goals may not apply to you, or you may have other goals not listed here. How much you're able to set aside may also vary depending on your other financial obligations. A financial advisor can be a valuable partner throughout your life, helping you stay on track to reach your financial goals.

Reach your financial goals throughout your life

No matter your personal goals, having a plan can make even the most daunting objectives achievable. Outline your goals and timeline, review your budget and leverage financial tools to stay on track. Planning for short- and long-term goals doesn't have to be overwhelming. Turn your goals into reality by starting your savings journey today with the help of the Citizens Savings Tracker®.