Today’s post is Women and Money: Short-Term Needs and Long-Term Goals. With the coronavirus packing a lot of punches in the form of unemployment or cut hours, we’re constantly re-evaluating our financial goals.
Any loss of income is a huge difficulty for single women. Let’s not forget women who are married or in relationships. Hopefully there’s another person with an income contributing to the household expenses, so things might not be as dire.
But when we’re single, we only have ourselves to rely on. If we lose our jobs, we have no income. This is why us single women need to figure out multiple streams of incoming money. This extra income could be from a second (or third) job, investing money in stocks that pay dividends, selling stuff, or doing one-time side gigs.
Off-kilter financial advice
Do you ever notice how advice for people struggling financially always seems to include the ever popular “rent out an extra bedroom in your house”?
There’s a big reason why I don’t advise women to rent out an extra bedroom in the house for income. Most of us don’t own a house and we probably rent a small place because that’s all we can afford on a low income. The landlord might not allow roommates and would want any extra adults living in the apartment to be added to the lease.
Not to mention loss of privacy. The older you get, the more set in your ways you are. Tripping over someone else in the house isn’t an ideal living situation.
I try to offer advice that’s more about how I’m currently living or what I’ve learned from past situations. Write what you know. Right?
Too many (well meaning?) financial advisors throw out financial advice when they’ve never personally never lived through the situation.
Who else is always struggling with finding a balance between short-term needs, short-term goals, and long-term goals? That’s what prompted today’s post about Women and Money: Short-Term Needs and Long-Term Goals.
Many of us live paycheck to paycheck. Our short-term needs are usually what it’s going to cost us to get through the next month or two.
Some of our short-term needs include:
- Car insurance
- Gas for the car
- Cell phone
- Minimum credit card payment
Our short-term needs are all about survival.
Short term goals are tricky when it comes to executing them or completing them. Women who don’t have a lot of money but are determined to start an emergency fund are facing the first hurdle to save $1000 as fast as possible. At the same time, we have to allocate money for our short-term needs including credit card debt and other loans. They might take years to pay off, but if this is in your short-term goal list, you’ll be motivated to accelerate the “paid in full” dates.
Do you ever look at your credit card statement where it says if you pay only the minimum amount, it will take X number of months to pay off the bill? The higher the amount – the more stressful that is when you realize it’ll take 30 months, 100 months, or maybe even longer.
Yikes! How did we ever get into this debt trap? It probably had nothing to do with overspending and buying frivolous items and taking fancy trips. More than likely, the debt came because we’re unable to earn enough money in a month to meet our basic needs and took out credit card debt to pay the rent or buy groceries.
If we’ve lost our jobs or had our hours cut back, we have to focus on our basic survival needs: shelter, food, and transportation. Just being able to pay our monthly bills is the primary short-term goal.
But let’s figure out a few other financial short-term goals if we’re not currently dealing with unemployment.
- Emergency fund
- Dental work
- Car repair
- Paying credit card debt
- Paying car loan or other personal loan
- Buying a new mattress or other furniture
- Home improvements (if you’re not a renter)
- Home/renter insurance
OK, now that the ball’s rolling, does this give you ideas to figure out for short term goals? We need to throw a little fun stuff into our financial goals. Life has to be more than constantly struggling just for our basic needs.
Long- term goals
Coming up with a list of long-term goals is trickier because it’s subjective, everyone is different. Some people might put paying for a wedding in the short-term goals, others might see it as a long-term goal. You know the ones who have a $10,000 engagement ring, $5,000 wedding gown, 100+ people at the reception, a live band, a videographer, and ka ching, ka ching. Weddings can also fall in that grey area because some might not see them as a financial goal at all. Go to city hall and get married by a justice of the peace. Fifty bucks. No reception. There are better uses for that money than a big shin dig.
Also subjective is the definition of “long-term”. Saving for retirement could be decades away for someone in their twenties.
Or much sooner for someone in their fifties, putting it into a short-term goal.
In which case, I recommend reading David Bach’s book Start Late, Finish Rich. (Disclosure: I’m an Amazon associate. If you click and make a purchase, I’ll receive a small commission for the referral.)
Let me try to come up with some long-term goals:
- Major trip of a lifetime
- Saving for down payment on a house
- Retirement account
- Paying off all debt
- Moving to a warmer climate
- Buying an RV
It’s a balancing act for women and money: short-term needs and long-term goals. How do we know when we’re slotting them into the correct category?
Financing the goals
Whether it’s a short-term or long-term goal, the tricky part is navigating around your regular monthly expenses like housing, utilities, and food.
Looking at the lists I created for short-term and long-term goals, I’d say the priorities are an emergency fund, a retirement account, and paying off debt.
It doesn’t matter how you look at it. There’s only a small amount of money left over after basic monthly expenses have been covered. But here we’ve created a dozen goals that we’d like to toss money at so we can afford to buy them one day.
Let’s go back and look at a couple of posts where we do a backwards budget and figuring out your money by filing in a money map.
These two exercises help understand how much money you have coming in each month, how much money you spend each month, and if you have any gaps to bridge.
This helps you figure out how much money you can input into different categories that you want to save for. It also helps you figure out areas you need to cut back spending in. It also slaps reality in your face and that you need to find more monthly income.
That’s not a shocker to us. We’ve spent most of our lives trying to figure out ways to make more money.
I’m already living about as frugally as I can considering I live in an expensive part of Canada and already live below my means. There’s not much lower I can get unless I pitch a tent in a homeless camp.
I’m always on the lookout for finding ways to make extra money.
Juggling act when it’s all about Women and Money: Short-Term Needs and Long-Term Goals
You have to start somewhere, so write down your short- and long-term financial goals, including the grey area if you’re just not sure which column your goal falls under. Nothing is wrong or right here. Every person is different, dictated by their current income and savings.
Start by writing down what matters most to you. It doesn’t even matter if it’s whimsical like getting a Ferris wheel for your back yard.
We deserve some fun in our lives!
Once you’ve made your list, figure out what’s the easiest to achieve.
What is within reach?
What will take longer?
Start moving some of your short-term and long-term goals into the opposite category. Or maybe that grey area. That unexplained grey area. It’s the stuff we’d like to achieve, but not sure if it’s short-term, long-term, or even longer than that!
Use the money map and the backwards budget to figure out what’s coming in and what’s going out.
Once you’ve plugged the leaks and have found a few extra dollars, look at the first couple of priorities and throw money into savings accounts specific to those goals.
Prioritize then achieve your goals
No matter how much you juggle, you need a starting point and that is prioritizing your goals. If you don’t figure out which of your goals to start knocking off first, you’ll never get started.
Start off by asking yourself what is your financial goal. If you don’t know where you’re going, you can’t chart a route to get there.
When my horse, Mark, passed away in 1996, I didn’t want to get another horse right away, but I knew I’d eventually get another horse, so I started a horse fund. Any money I “found” went into that horse fund: birthday or Christmas money, a bonus at work, or a tax refund. Generally, it just meant unexpected money.
Whether you’re thinking about a horse or a fun vacation, you can put any unexpected money into this account. You might not have a final dollar amount in mind, but eventually you’ll figure out how much money you need to save in this account.
To help achieve my horse fund, I bought a coin tray and coin wrappers. My spare change went into the tray and when I had enough coins, I rolled them and took them to the credit union and deposited into my horse account.
What really pissed me off was it seemed to me that my coins were going down even though I hadn’t wrapped them. Noticeably, my loonies and quarters. I asked the deadbeat if he’d been taking money out of my coin tray. Apparently he was using my spare coins as his slush fund to buy coffee at Tim Hortons. He felt guilty when I said those coins were going to my horse fund and then he kicked in $20.
It took five years, but in 2001 when I had around $3,000 in my horse fund, I bought a beautiful Appaloosa named Whistler.
Sadly, he passed away in 2019 at age 29. RIP my beautiful boy.
You might not think a few coins will make a difference, or that $5 or $10 going into an emergency fund or investment account is going to get you very far, but it all adds up.
Would you take a road trip to Alaska without a map?
We can’t just coast through life enjoying the scenery. because if we do, we’re going to miss some sights along the way and probably get lost.
Make sure you choose goals that keep you focused and motivated.
Twenty years ago I wanted the happiness owning a horse brings to my life, and I saved for five years to make that dream come true. Today, saving for a horse isn’t a priority or even a goal. Oh sure, you say. That’s because you already own that little cutie, Cajun. But does Cajun need a buddy? Sure he does, but I’m tired of being horse-poor. I no longer have a horse fund because my priorities have changed over the years.
Here are four ways to keep yourself motivated:
- Choose a goal that you really believe in. Like everything else in life, if it’s not something you really want, you won’t stick with it.
- Reduce your choices. If you have too many goals that need to be fed money, you’ll suffer from decision overload while trying to decide which account to fund.
- Find an accountability buddy. Tell your buddy your financial goals and commit to following up once a month with a progress report.
- Keep the big picture in mind. Slap a sticky note on your fridge or bathroom mirror with your financial goal and how it will change your life.
Something we’re always thinking about: Women and Money: Short-Term Needs and Long-Term Goals.
Slowly but surely, you can take care of your short-term needs while funding your long-term goals.
Let’s get started! Good luck!
Published by Cheryl @ The Lifestyle Digs on October 5, 2020.