When Short-Term Goals Become Long-Term Financial Habits

by Vinaya HS on February 7, 2011

in Finance

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I used to have a significant number of short-term goals (way more than what I recently listed here). For example, I used to have as my short-term goals:

  • Stay one-EMI ahead on my car loan i.e. save for next month’s EMI from this month’s salary.

  • Save for all of my annual expenses in the form of an Annual Expenses EMI (Note: Right now, I don’t include this component as part of my household expenses. Maybe it’s time I should. Definitely food for thought.)

  • Payback any expenses charged on my credit card within a week of incurring the expense. (I followed this diligently even during my recent trip to the US.)

  • Keep a small emergency fund in my wallet and in my car at all times. (I’ve lost track of the number of times I’ve fueled at a pump only to find that there’s no cash in my wallet. I don’t carry my credit card either. These mini-emergency funds have been a lifesaver.)

I used to look-up each of these goals several times over the course of a month. I had to constantly remind myself. But gradually, as the months progressed, these short-term goals became ingrained long-term financial habits. Now, I do each of these subconsciously.

For example, each month as soon as my salary is credited, I immediately divert the relevant amounts into expense items titled next-month household expenses, annual expenses EMI, credit-card repayments, etc. In other words, these once-upon-a-time short-term goals are now permanent line items in my personal finances tracker (specifically in the sheet representing my “Single Source of Financial Truth”). I can’t miss these, even accidentally, since they are right up there in my tracker.

And what does it take to get here: discipline and a willingness to change.

How about you? Have you been through a similar phase with your personal finances?




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

{ 2 comments… read them below or add one }

Ankur February 7, 2011 at 10:57 AM

how many accounts do you manage? Separate account for each short term goal? If yes, any preferable banks?

Vinaya H S February 7, 2011 at 11:04 AM

No. It’s a single savings account — my single source of financial truth.

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