Deciding between savings, credit cards and loans for financial goals?

Business: When it comes to achieving short-term financial goals, people usually have the option of either planning for it by saving money or fulfilling it by taking a credit card/personal loan. The second option will give you instant gratification, and the first option may take some time and hence give delayed gratification. In this article, we will understand which option to use to meet short-term financial goals.

What are short-term financial goals?

Based on the timeline to achieve financial goals, they can be classified into short-term, medium and long-term financial goals. Short-term goals are those that need to be achieved either immediately or in the near term. The timeline to achieve these goals usually ranges between three months to three years. Since the timeline to achieve these financial goals is shorter than medium and long-term goals, they should be taken on a priority basis.

Some examples of short-term financial goals include the following:

Creating and maintaining an emergency fund

Buying term life insurance for all the earners in the family

Buying health insurance for all the family members

Buying electronic gadgets like mobile, laptop, tablet, etc.

Buying consumer-durables

Renovating the house

Buying a two-wheeler or four-wheeler

Going on an annual vacation with the family

Building a fund for buying a house, down payment, etc.

Out of the above list, one should give high priority to the first 3 short-term financial goals and focus on achieving them. It is recommended that one plans and funds them with their own money as part of their comprehensive financial plan. Once these are planned, one can pursue the remaining short-term financial goals.