Using Personal Loans to Achieve Long-Term Financial Goals

You might be thinking, “How does more debt mean more savings?” We get the contradiction. Think of it this way: some large purchases may be too big to fit into your everyday budget. For example, if your kitchen appliances need to be replaced, you might not want to run up a big balance on your higher-interest credit card. There may be a lower-interest tool that allows you to access cash quickly to pay for those larger necessities or emergency expenses. This is when a personal loan might be a good option. 

Taking out a personal loan may make it easier to save for long-term financial goals. Instead of saving for one goal at a time, you could pay off a higher rate loan while also saving for things like retirement at the same time. For example, if you wait to buy a house until you save enough for a down payment, you risk tying up your money for this one goal while ignoring other plans. 

We’ve laid out the basics of short- and long-term financial goals, and how you might achieve a balance between them.

Table of contents:

• What are short-term financial goals?
• What are long-term financial goals?
• How might you use short-term borrowing to achieve long-term financial goals?
• Should you borrow now or wait and save?
• Achieve your long-term goals with a personal loan

What are short-term financial goals?

Short-term financial goals are typically related to everyday living or immediate needs. These might include home repairs or a vacation. They might also relate to regular expenses like rent, utilities, cell phone, or streaming services. Each of these expenses could be part of a well-planned budget.

You could make a concrete plan for these expenses. For example, you might put $50 into your savings each month, pay cash for purchases under $20 or shave $75 off your monthly household expenses by sticking to the budget.

What are long-term financial goals?

Long-term financial goals typically include things that you don’t pay for immediately. But you know you’ll have to pay for within a set period of time. This could include major goals like covering a child’s college tuition, paying off your mortgage, or retiring with a certain amount of savings.

Examples of short-term and long-term financial goals

How might you use shorter-term borrowing to achieve long-term financial goals?

Borrowing to save money may seem contradictory. But unexpected events do happen. A sudden, large expense may have the potential to undo your savings progress.

What happens if you get a surprise car repair bill? You might dip into your savings, but that may upset your long-term savings goals. Or, if you don’t have savings, you might rack up credit card debt. That could hinder your short-term debt management goals. And if you don’t get your car fixed and miss work, it may be harder to save. Fixing your car might be an immediate concern, but it also affects your long-term plan.

A personal loan might help you cover the unexpected expense without depleting your savings, adding to your credit card balance, or making planning feel impossible. With a personal loan, you get a fixed rate with one set regular monthly payment you can budget for. That could help you keep your short- and long-term financial goals on track.

Should you borrow now or wait and save?

Taking out a loan may not be an obvious choice as you work to reach your long-term savings goals. But there are strong reasons to consider it. For example, if you wait until you save enough for a large purchase, you might delay getting some basic things and miss out on fun and enjoyment. And when you dip into your savings for an unexpected expense or a special trip, you might slow your progress toward reaching your long-term financial goals.

Instead, shorter-term borrowing with a tool like a personal loan may help you afford major expenses. It could also keep your personal finances on track. A personal loan is unsecured, so you don’t need to put up collateral (like your car or home) to receive the loan. 

With a Discover® Personal Loan, you can borrow between $2,500 and $40,000. We offer flexible repayment terms which allow you to choose how long you’d like to repay your loan—from 36 up to 84 months. You’ll know exactly how much you’ll pay each month, and for how many months. For example, if you get approved for a $18,000 loan at 12.99% APR for a term of 72 months, you'll pay just $361 per month.

You can also use a personal loan for a variety of reasons. Some people borrow money to help pay for major events in their lives, like a honeymoon or dream vacation. Others use personal loans for medical expenses or home improvements.

Achieve your long-term goals with a personal loan

Saving and borrowing the right way might help you achieve your long-term financial goals. Life’s necessities, pleasures, and unexpected events may make it harder to save. But, there are ways to help keep your long-term savings goals on track.

Think a personal loan may be right for you? Start by figuring out how much you need to borrow and what kind of repayment plan you can afford. Our personal loan calculator can help you do the math.

You’ll enter the amount you need, your credit score, and the length of time you might need to pay the loan off. After you get an estimated monthly payment, you can adjust the loan repayment term to find a payment that fits your budget. There is no commitment and no impact to your credit score.