The Essential Steps to Saving Money for Short-Term Goals

Estimated reading time: 4 minutes

Managing your personal finances can feel daunting if you’re unsure where to start. If you can relate, you’re not alone. In fact, a Bankrate survey from June, 2025 reveals that only 46% of adults have enough money in their emergency savings to cover 3 months of expenses.

By breaking down the steps of money savings, you can achieve your financial goals now and in the future.

What Defines a Short-Term Goal?

Short-term goals often address immediate financial needs, typically taking a year or less to achieve.

Some common short-term goals include:

• Building up an emergency fund
• Minor repairs or home improvements
• Buying furniture or a new appliance
• Attending a wedding or another large event
• Paying for a vacation

How Do I Start Saving for Short-Term Goals?

Financial experts advise following the SMART acronym when you are goal planning. Does it feel specific, measurable, achievable, realistic, and timely? Then you’re on the right track!

Define Your Goal

While tedious, the first step of saving is to define the amount you’d like to reach. You can break this down further based on your specific goal.

When you’re saving for an emergency fund, total up your monthly expenses. This could include housing, food, gas, and any other costs you accrue during the month. Then, multiply the total by the number of months you want your savings to cover.

If your goal is paying off small debt, include both your debt balance and the interest you will accrue. When saving up for travel or a major event, calculate travel prices, food and board, and any necessary tickets or spending money you will need.

Set Your Timeline

Choose a date you want or need to have your saving goal met. Setting smaller goals within that timeline can ease your stress and help you recognize the progress you’re making without worrying about a looming deadline.

Track Your Progress

Meeting smaller milestones can help you keep yourself accountable as you continue toward your goal. Most banks and credit companies will allow you to monitor your accounts, allowing you to see in real time when your funds increase.

How Do I Budget if I Don’t Know Where to Start?

Consistently stowing away funds may mean you’ll have to establish a stricter household budget until you reach your goal. Your budget should consist of three main parts: your current income, a list of expenses, and saving opportunities.

Monthly Income

Recording your monthly income is essential for budget creation. Without a baseline for how much money you have, there is nothing to compare against your debt. If your partner or spouse shares your finances, add their income as well. For freelance or variable income, you can obtain your monthly average income by dividing last year’s earnings by 12.

Your Expenses

Using your credit report and purchase receipts, list all your expenses, including essential costs and irregular expenses. This should include your rent or mortgage payment, car payment, student loan or other debt, groceries, and gas costs.

Savings Opportunities

Now that you’ve laid out your monthly income and expenses, you can look for opportunities to cut back on unnecessary spending. Determine how much money you can realistically put away every month. Is there a way you can set spending limits for yourself? Moreover, is there a chance you can increase your income by taking extra hours, asking for a raise, or taking a side gig and freelancing?

Create a Savings Plan

There are numerous ways that you can establish a consistent savings plan. One method is manually transferring money between your checking and savings accounts every month. Some financial experts recommend the 50/30/20 method, which suggests a person spends 50% of their income on essentials, 30% on discretionary spending, and 20% toward savings and paying down debt.

Pushing You Toward Your Financing Goals

Whatever method you choose for your savings, be sure you stick to it. A dedicated money saving strategy can help you reach your financial goals, whether in the short term or the long term. By starting these habits early, you may be better prepared to fight inflation versus someone who doesn’t have a saving strategy.

When it’s time for you to obtain a pre-approval for a home purchase, your mortgage lender will be examining your debt-to-income ratio to ensure your finances can handle your monthly mortgage payments.

While we aren’t financial planning or debt experts, our Loan Originators are dedicated to helping you achieve homeownership goals. If your finances are in order and you’re confident in your ability to pay back debt, let’s help you make your home financing dreams a reality!