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As you start your career or approach retirement, your short- and long-term financial goals will change. Here’s what to focus on each step of the way.

Over the course of your life, your financial goals will change. And mapping out what you should do — and where you should be financially — as you age is a great way to increase your financial wellbeing now and in the future.

This can be challenging if you don’t know what goals you should be working toward — or how long-term financial goals differ from short-term financial goals. In deciding what to tackle first, it can help to think of short-term goals as moves that can immediately improve your finances and long-term goals as ones that address your financial health in the years to come.

So, as you head into the new year with a renewed sense of purpose about improving your finances, consider aiming for goals tailored to where you are in life.

Stage 1: Just starting out

When you enter the workforce and start collecting a paycheck, you should likely focus on the basics, such as these common short- and long-term financial goals.

Short-term goals:

•  Get a handle on your spending: Evaluating expenses is the first step, because many people aren’t aware of how much they spend. Now that you have money coming in, it’s important to track your spending against your after-tax income to ensure you have enough cash on hand each month for essential expenses (rent, groceries, transportation), debt payments, and all the stuff you want to do or buy. For that, you’ll need to create a budget.

•  Be prepared for an emergency: As you become financially independent from your parents or other family members, you need to have a cash reserve for emergencies and unplanned expenses — think medical bills, car repairs or an extended job loss. You can make your money work harder for you by stashing your emergency fund in a high-yield savings account with a high interest rate. Opening one now means you can earn more on your deposits than with regular savings accounts.

•  Pay down debt: The average American has about , including mortgages. And according to , average consumer debt balances increased in 2023 — with credit card loans, auto loans and mortgages all going up. While the average student loan balance went down slightly, it was still more than a whopping $38,000. Since it takes longer to get out of debt than it does to get in it, you might want to focus on paying down debt now. Some strategies for doing this include the “snowball” method (paying off debts from smallest to largest), the “avalanche” method (paying off the highest-interest debts first and making minimum payments on the others) and debt consolidation (rolling all your debts into one loan with one payment). With a large amount of debt, however, you might want to bump this goal down to your list of long-term goals. Still, start now.

Long-term goals:

•  Save to buy a home: If you hope to own a home someday, a good strategy is to set up a separate savings account for the down payment you’ll eventually need. Consider a high-yield savings account, money market account or certificate of deposit (CD). Just note that CDs have withdrawal fees if you try to access the money before the chosen term is complete.

•  Begin planning for retirement: You may get some help with this goal at work. If your employer offers a 401(k) retirement plan, you may be automatically enrolled when you start your job. Great! If not, you should consider signing up. Your contributions will come out of your paycheck before taxes, and many employers match contributions.

Stage 2: Building on your foundation

Once you have the basics in place and are seeing your earnings and savings grow, consider more ambitious goals, such as the ones below.

Short-term goals:

•  Be more attractive to lenders: With a major loan like a mortgage in your future, you may want to improve your credit score. Your credit score — a measurement of your credit risk based on your history of borrowing and paying your bills on time — plays a big role in the types of loans you’ll be able to get and the interest you’ll pay. Your score may also affect your insurance premiums and, sometimes, your ability to rent an apartment. Checking your credit report and current score is a good first step. Then make moves to raise it, including paying down debt and staying on top of your bills.

•  Explore entrepreneurship: If you feel stable financially, consider pursuing a side hustle or launching a small business. Have you always wanted to host your own podcast, sell your handmade bags online or moonlight at the local library? Those are promising side hustles that can provide extra income and allow you to keep your full-time job. Conduct market research to see if you can turn your idea into a successful enterprise. Then write your business plan, determine how much funding you’ll need (and your best funding options) and you’re well on your way.

Long-term goals:

•  Pay for future education bills: If you have kids or plan on having kids, the sooner you start saving for their college education, the better. That’s where a tax-advantaged 529 education savings plan comes in. The money you contribute to this account grows on a tax-deferred basis, and withdrawals for qualified education-related expenses are tax-free.

•  Advance your career: It’s never a bad idea to map out your career goals — where do you want to be in two years, five years or 10 years? — and then come up with a plan to achieve them. Do you want to pursue promotions within your current company, move to a different firm or switch careers entirely? Maybe you want to go back to school to learn new skills, or you just want a job that aligns with your values. Whatever your goal is, decide what success looks like to you and come up with a plan for getting there.

Stage 3: Enjoying peak earning years

Most people hit their peak earning years in their 40s and 50s, when all their hard work is finally starting to pay off — literally. While it can be tempting to splurge at this stage (a phenomenon known as “lifestyle creep”), you can pursue these goals and stay on course.

Short-term goals:

•  Do that remodel you’ve been dreaming about: Have you always wanted to update your kitchen, turn your garage into a workshop or create a stylish, rustic living room? Well, if you have the funds, this phase in life is a good time to remodel so that you still have decades to bask in the results. Be sure to set a budget first — and you might need to tap your home equity to help you on your renovation journey.

•  Prepare for the moment your kid says “I do”: By now, your children may be getting ready to pull the marriage trigger. And sorry mom and dad, but weddings can be very expensive. Decide if (and how much) you want to contribute to the big day and start saving. You should also talk to your bride or groom about their plans, discuss some money-saving strategies they might consider and help them create their budget.

•  Reward yourself (and your family): If you’re in a position to do so, and it doesn’t disrupt your other financial goals, budget for a trip or something fun, or even buy a vacation home. You deserve it — and may finally have more funds to spare.

Long-term goals:

•  Ensure your family’s future: That means having an up-to-date will and executor; naming the most appropriate beneficiaries for your retirement accounts, investment accounts and life insurance; and potentially creating a trust. You likely set up many of these things earlier in life, but you should review and potentially revise your estate plans as retirement is drawing closer.

Stage 4: Nearing retirement

As the finish line draws near, these goals may rise to the top of your list.

Short-term goals:

•  Put an actual date on your retirement: This will depend on several factors, including your current job (do you love it or can’t wait to leave?), your savings, the timing of any potential pensions and when you want to collect Social Security. You can start taking Social Security at age 62, but you’ll receive a 7 to 8 percent larger monthly payment for every year you wait until your full retirement age, which is 67 for those born after 1960.

Long-term goals:

•  Prepare for future healthcare costs: Many older adults will need some form of assistance late in life, and long-term care insurance can help mitigate those costs. A policy is also more affordable if you buy it long before you need it — so now might be a good time to look into your options.

•  Craft a second act: You may envision a retirement full of new ventures: the business idea you put on hold, the nonprofit work that has always inspired you, the book you hope to write. Now’s the time to lay the groundwork so you can enjoy everything you’ve worked hard for over the years.

Reviewing and revising goals

Everyone’s life is different. As such, your finances won’t always follow a predictable pattern, and your short-term and long-term financial goals won’t always fit neatly into designated phases. So, check in with yourself occasionally, and reassess.

To stay focused and inspired it helps to have visual cues of your goals. For example, find a picture that represents a goal and make it your phone background, or print out a list and put it on your fridge.

In the end, your main goal should be doing your best; don’t give up if you feel off track or can’t execute a goal. You can always try again, set new goals or change your path entirely.

Explore more ways to create positive money habits so you can bring your goals to life. And discover steps you can take at any age to grow your retirement savings.