INSIGHTS FROM FIRST FOUNDATION

A First Foundation Blog

Budgeting for Short-Term and Long-Term Savings Goals

| 7/21/21 9:34 AM
3 minute read
Prioritizing your goals and choosing the right savings vehicles

When you consider your financial goals, you likely have some short-term goals that you want to achieve in the near future and other long-term goals that won’t happen for years down the line. Juggling these goals and understanding how to save for them can be a challenge. At First Foundation Bank, we want to help you make this balancing act easier. So here’s a look at the differences between short- and long-term goals and what the right tools are to help you save for each.

What is a short-term goal?

A short-term goal is anything you’re saving for within the next three years. Examples might include more immediate expenses such as paying a utility bill or saving for holiday shopping. Or they might include goals that will happen in a year or two, such securing an emergency fund, saving for a vacation, or pulling money together for a large purchase.

Because you will need access to your money relatively quickly, consider saving for short-term goals in a savings account, certificate of deposit (CDs) or money market account. Savings accounts offer immediate access to your cash. CDs frequently offer higher interest rates, but may have more limitations on when you can access your money. 

What is a long-term goal?

A long-term savings goal can represent anything you’re saving for in a few years or several decades from now. Saving for a young child’s college education, paying off a mortgage, or saving for retirement are all examples of long-term goals.

Because you’ll be saving over a longer period of time, your savings will be better able to withstand short-term risk. That means, investing in stocks and bonds, with their greater earning potential, may be more appropriate for these goals. For some long-term savings goals there are tax-advantaged accounts available that can help boost your savings. For example, 401(k)s and IRAs can help you save for retirement, and 529 plans can help you save for education expenses.

Estimate costs

Once you’ve organized your goals according to time horizon, put a real dollar amount on each one so you know how much you’ll need to save. Remember to include all associated costs. For example, there is more to college expenses than tuition. You have to consider room, board, technology, and buying books. Use our Savings Goal Calculator to see how much you’ll need to put away to reach your goals.

Prioritize your goals

When you have a clear sense of cost, you can start to prioritize which goals are most important to you. For example, you may want to prioritize an emergency fund to protect your finances in case you lose your job or are saddled with an unexpected major expense. You may also want to prioritize paying off high-interest debt and saving for retirement.

After that, consider your other debts and goals, such as putting together a down payment for a house or saving for a new car.

Dig into your budget and adjust as needed

Budget to ensure you have enough money to cover your goals. Start by subtracting your necessary expenses from your income to determine your discretionary income. Use this to fund your savings. If there isn’t enough in the budget to fund all of your goals, you have a few options: You can free up more money by cutting back on your expenses, you can increase your income, or you can modify your goals.


Whether you’re looking to meet a goal a month from now or thirty years from now, we offer a variety of ways to save. We can help give you the tools to create a structured plan for steady savings that help you get where you want to go.

First Foundation Bank
About the Author
First Foundation Bank
First Foundation Bank serves individuals and businesses at all stages of their financial journeys. In addition to the usual deposit and lending offerings, trust services, wealth planning, investment management, and philanthropy services are all available to clients as part of the First Foundation Inc. integrated platform. Read more