It’s a good idea to get in the habit of creating targeted savings goals, especially if you want to save money for significant expenses in your life. Short-term and long-term goals may be discussed more frequently when creating goals, but medium-term goals are just as substantial.
What are medium-term goals?
There are three types of financial goals: short-term, medium-term, and long-term.
- Short-term goals are usually achieved in less than a year
- Medium-term goals are reached in one to five years
- Long-term goals are completed in more than five years
Why do you need medium-term savings goals?
Medium-term financial goals are an important component of a well-thought-out long-term strategy because these goals can help support your long-term goals. You might think of your medium-term goals as a stepping stone to achieving long-term goals. Or, you may have a large expense in your life that you need to start saving for.
What are some examples of medium-term goals?
Your goals are personal, so one person’s medium-term goals may not be another’s. You should consider what goals you can save for in the next five years to establish your medium-term savings goals.
Saving for a wedding.
One example of a large medium-term savings goal is a wedding. According to The Knot’s 2021 Real Weddings Study, the national average wedding cost is $28,000.
Saving to buy a home.
Another medium-term saving goal example is a down payment on a home. A National Association of Realtors survey finds that four-fifths of first-time buyers rely on savings for their down payments.
Whatever you’re saving for over the next one to five years, you’ll want to make sure you have the right strategy in place.
How can you save for medium-term goals?
Savings accounts and certificates of deposits (CDs) can be good vehicles for saving for your medium-term goals. Beyond a traditional savings account, a high-yield savings account can offer a higher interest rate, allowing you to grow your savings.
Having multiple savings accounts could also help you reach your goals.
You can use different savings accounts to earmark your money for specific goals. This way, you can avoid mistakenly spending money meant for a particular savings goal on something else. You can also get a clear picture of how your different savings goals are progressing if you have a savings account for certain goals.
Find the best savings strategy for you.
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