Short, Medium, and Long-Term Financial Goals: How Do You Save Up for Each Type?

You’ve achieved your squad goals and couple goals, but what about your financial goals? They might be less exciting, but they’re just as important to have—especially in Singapore.

Things like cars, homes, and raising a family don’t come cheap in Singapore, so they require considerable planning and saving in order to make them happen. Even after you’ve completed all those milestones, you also need to manage your own finances rather than rely completely on your CPF savings to retire comfortably.

Like anything else in life, getting to where you want to be starts with goal setting. Financial goals can be categorised into short-terms goals like building an emergency fund, medium-term goals like saving downpayment for a home, and long-term goals like paying off your mortgage.

In this article, we’ll look at the different types of financial goals in Singapore and figure out how best to save for them.

 

1. Types of financial goals: short, medium and long-term

It can be pretty daunting to think of all your financial goals for the rest of your life at once. How on earth will you ever have enough money?

A useful way to break them up into manageable chunks is to split them by time frame, so you have short-term, medium-term and long-term goals.

Financial goals	Time frame	Examples
Short-term	1 to 3 years	Building an emergency fund, saving for a vacation, paying off minor debt
Medium-term	4 to 10 years	Saving for a down payment on a home, planning a wedding, funding your child’s university education
Long-term	>10 years	Retirement, paying off a mortgage, building wealth through investment

 

 

 

 

 

 

 

Short-term goals provide immediate financial stability and gratification by addressing urgent needs like paying off small debts.

Medium-term goals like paying for a house downpayment bridge the gap between current needs (like needing a house) and long-term aspirations (like starting a family in it), helping you progress steadily.

And finally, long-term goals focus on securing lasting financial security. They requires patience and discipline because these tend to take time to build. For example, many people save for retirement throughout a significant portion of their working lives.

You can work towards achieving more than 1 goal at the same time. As investments have much stronger growth potential the earlier you start, it’s a good idea to identify goals and start working on them, however slowly, as soon as you can.

However, because the time frames are different, it’s best to adopt a different strategy for each type of goal.

 

2. Short-term financial goals

Short-term goals are those for which you will need cash in a handful of years (approximately 1 to 3). They’re important for immediate financial stability and gratification, helping you manage daily expenses, build an emergency fund, and stay on top of bills.

As short-term goals are not far off, you should be able to estimate quite accurately the amount you will need.

Examples of short-term goals

How to set short-term goals

With short-term financial goals, you must first figure out how much money you’ll need in a few short years’ time. Since we’re talking in the short term, you don’t need to tackle big questions like “will I have kids some day and need to pay for their education?”. Nope. At this point, start by defining specific, realistic goals with deadlines. This creates focus and accountability.

For example, perhaps you know that in the next 1 – 3 years, you’ll need to have built up an emergency fund, but you also really want to make that dream trip backpacking around Europe before you turn 40. Both of these are valid goals.

Once you know your goals, start prioritising. Arrange short-term goals by urgency and impact on overall financial health. That means tackling essentials like emergency funds or debt repayment first before you start working on things like vacations.

How to save for short-term goals

They most important word here: liquidity. For example, we don’t recommend investing in stocks for short term goals—you’ll be screwed if there’s a market downtown just as you need the cash. Since you need to invest in a way that gives you the option to liquidate your investments on short notice, illiquid investments like property are also out.

Instead, use high-liquidity savings options like high-interest savings accounts or a robo advisor’s cash management account. These allow easy access to your funds when needed, which is crucial for short-term goals like building an emergency fund. Having your money readily available ensures you’re prepared for immediate financial needs without penalties for withdrawals.

Automating your savings is another effective strategy. Setting up automatic transfers from your checking account to a designated savings account helps you save consistently without relying on manual effort. This builds the habit of saving and ensures regular contributions toward your goals, making it easier to reach them without the temptation to spend that money elsewhere.

 

3. Medium-term financial goals

Here, I’ve defined medium-term financial goals as those for which you need cash in approximately 4 to 10 years.

Examples of medium-term goals

If you’ve been going out with your partner for some time and wish to get married and move in together, looming financial goals could include a wedding, a downpayment on a new home and renovation of your new pad.

Further down the road, you could also be looking at funding your child’s university education, since you will have about 18 years from his or her birth to prepare for it.

How to save for medium term goals

To save for medium-term financial goals, start by creating a dedicated savings plan. Begin by figuring out how much you need to set aside each month. Simply divide your goal by the number of months you have to reach it.

For instance, if you’re aiming for $6,000 over three years, that’s about $167 per month. Using budgeting apps or spreadsheets can make tracking your progress easy and help keep you motivated.

Next, consider some low-risk investment options. Things like fixed deposits or government bonds offer better returns than regular savings accounts without much risk. These options strike a nice balance between safety and growth, making them great for medium-term goals like a new car or a downpayment on a house.

The more time you have to save up, the more room you have to play around with higher-risk/higher-return investment methods too. Depending on exactly how much time you have, you can consider investing in stocks, bonds, ETFs and unit trusts. If you have time on your side, you might want to use a dollar cost averaging approach by throwing in a fixed sum every month.

Lastly, be open to adjusting your plan as life happens. Job changes, surprise expenses, or even extra income can impact how much you can save. Check in on your progress from time to time, and tweak your contributions as needed. A little flexibility goes a long way in staying on track while adapting to life’s ups and downs.

 

4. Long-term financial goals

Retirement is one long term goal everyone in Singapore has. With a long horizon of over 10 years (or even several decades if you’re young enough), you get the most wiggle room to put together a varied portfolio that’s suited to your investment style and risk appetite.

How to save for long-term goals

To save for long-term financial goals, it’s crucial to start early and take advantage of compound interest. Compound interest means you earn interest not only on your initial savings but also on the interest that accumulates over time. The earlier you start saving, even with small amounts, the more time your money has to grow exponentially. Starting early allows you to reach long-term goals, like retirement, with less stress and more ease.

For higher returns, consider exploring higher-risk investment options. Investments like stocks, mutual funds, and ETFs typically offer better growth over the long term compared to traditional savings accounts. These options come with more risk, but because long-term goals usually have a longer time horizon, you can afford to ride out market fluctuations.

With this much time on your side, you are a perfect candidate for dollar cost averaging. So, you might decide to put aside, say, $500 a month to invest in a selection of ETFs. You won’t have to worry about short-term fluctuations and can instead wait to profit from long-term gains over a decade from now.

You can also look to buy investment property if you have the cash for it. Property can be used as a source of rental income, and can also be resold at a profit if its value rises to a high enough level.

No matter what investment vehicle you choose, remember to balance out your portfolio with some lower risk investments such as blue chip stocks or a retirement plan from an insurer.

As you approach your goals, it’s important to regularly review and rebalance your portfolio. Investments that were once high-growth can become too risky as your target date gets closer. Gradually shifting from higher-risk assets to safer options, like bonds or fixed deposits, helps protect your savings. This ensures your hard-earned money is secure as you near the completion of your long-term financial goals.

 

5. Balancing your financial goals

Balancing multiple financial goals can feel overwhelming, but prioritising your goals is the first step. You’ll have tons of different objectives on your mind, so first consider which are most urgent. Start with essentials like an emergency fund or paying off high-interest debt. After addressing immediate needs, balance short-term goals, like a vacation, with long-term ones, like retirement. It’s about finding a compromise between enjoying the present and securing your financial future. (I know, easier said than done!)

One way to help you manage multiple goals is the 50/30/20 rule, a simple budgeting method. Allocate 50% of your income to needs (rent, groceries), 30% to wants (entertainment, dining), and 20% to savings and debt repayment. This method can help ensure you’re working toward various financial goals without neglecting any.

Don’t forget to adjust the percentages based on your situation. If you have more immediate debt to pay off, you might dedicate a larger portion of your income to that and reduce spending in other areas temporarily.

Down the road, you might struggle to keep the balance and stay on track. To keep yourself motivated, break big goals into smaller, manageable milestones, and celebrate when you achieve them. This could be something simple, like giving yourself a small treat after reaching a savings target.

How do you know you reached your target? It starts with setting SMART goals. As with any other type of goal, your savings goals should be SMART—specific, measurable, achievable, relevant and time-based. In other words, you don’t want vague goals that you cannot quantify, or that are unrealistic given your resources and time-frame.

 

6. Final thoughts

Everything costs money, so your financial goals can quickly become a laundry list of seemingly impossible, lofty dreams. To make them more manageable and attainable, break up your financial journey into short (1 – 3 years), medium (4 – 10 years), and long-term goals (over 10 years). Each of these comes with different optimal strategies that will most efficiently help you reach your savings targets.

Remember, while starting your financial goal planning early is ideal, starting at all is the most important step. Be consistent with your saving, smart with your planning, and you’ll see those savings goals to fruition in no time.

 

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