Financial Goals

Glossary
TERM DEFINITION
risk

emergency fund a fund that can be used to save for large, unplanned life events, such as job loss

inflation

asset an owned resource or item of monetary value

Objective
In this lesson, you will _______________________________________________________________________.

Financial Goals
Three Categories of Financial Choices
The three categories are _____________, _____________, and _____________.

What question should you ask with each category?

Spending Saving Sharing

How much of my income do I

intend to save or invest to meet
my financial goals?

What are some financial goals for the different stages in life?

Goal for High School Goals for Early Career Goals for Late Career

• many teens and • • retirement

families save for
college tuition • • vacations

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 Keep in mind, financial planning is for both _____________ and _____________
purchases. You need to set _____________ and have _____________ to follow
through with those goals.

Why is financial planning What are some long-term goals that financial
necessary? What are some unforeseen situations planning can help with?
that can occur? • buying a home
• •
• • buying a car

•
Planning helps when unforeseen situations happen, An
• emergency fund can help pay for unexpected expenses.

Types of Financial Goals

Financial goal planning will help you avoid wasteful spending. Describe four financial goals you might want to
achieve.

1. Create an emergency fund. You can use an emergency fund to save for large, unplanned life events, such
as a job loss.
2. Find multiple sources of income. ________________________________________________________
____________________________________________________________________________________
3. Pay off debt. ________________________________________________________________________
Part-time jobs such as tutoring, babysitting, or working for a local shop can all help produce extra income.
___________________________________________________________________________________
4. Cut spending. Reducing the amount of money you spend means that you’ll have more money to spend for
other financial goals.

Other Goals to Consider

Other long-term goals to consider are ____________________, such as getting married and buying a house
and ____________________.

Goal Planning
Know what you want: As time goes by, I may decide to add more goals or fine-tune my
goals. I need to review my goals regularly.

Understand your current finances:

A list or a table that shows your sources of income and expenses will help you analyze your
finances. You can also list how much money you have in savings and any debts you may owe.
Writing down your savings, income, and expenses will help you get a better picture of your current
financial status and how much you’ll need to save to realize your goals.

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 Attach a cost to your goals:
Once you know your goals and financial status, you need to attach a cost to each goal. The
costs should indicate the total money, time, and effort spent toward realizing each goal.
Attaching a cost to your goals will help you identify the obstacles associated with each goal and
ways to deal with them.

Keep your goals flexible:

Your financial planning should be flexible enough to incorporate sudden changes. For
example, having an emergency fund will help you avoid going into debt if your car
breaks down. Having flexibility with your funds will help you stay on track to achieve your
goals.

Review and revise your goals: Although my plans may change, it’s a good idea to write
down my goals. When I know my goals, I can develop a financial plan to achieve them.

Remember your goals:

Follow your plan and have reminders that are visible daily to keep you on track. A
simple strategy such as keeping a picture of your goal in your wallet may keep
you from wasting money and lead you to success.

Short-Term Versus Long-Term Goals

Short-Term Goals Mid-Term Goals Long-Term Goals

pay rent new home pay off a mortgage

new car

vacation

pay off debt

less spending
Boost emergency savings
emergency fund

A solid financial plan includes these three priorities:

1. ____________________________ 2. paying off debt 3. ____________________________

What are your high- and low-priority goals?

High-Priority Goals Low Priority Goals

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SMART Goals
A SMART has the following characteristics:
Specific
Example: Create an emergency fund.
Measurable
Example: Save $20/month for a new bike.
Achievable
Example: Put $10 per paycheck into a savings account.
Realistic
Example: Save $50/month for 2 years for a vacation.
Timely
Example: Put $50 per paycheck into an IRA account.

Good financial planning includes a set ____________________ for both short-term and
____________________ goals.

Mini Goals can help create a ____________________ toward achieving a main goal.

What is the difference between a mini goal and a short-term goal?

__________________________________________________________________________
Mini goals act as checkpoints that help determine whether the goal needs revision. Mini goals should not be
confused with short-term goals. For example, if your short-term goal is to pay off a credit card within six months, your
__________________________________________________________________________
mini goal could be to pay off at least one-sixth of the bill every month. Mini goals are like stepping stones toward a
larger goal, while short-term goals can stand on their own.
__________________________________________________________________________

In addition to writing down goals, you should also _______________________________ to meet those goals.

Money Management Techniques

Envelope Method Expense Tracking

Another way to manage money is to keep a log, or record, to track spent money.
The envelope method helps you see exactly how much money you can spend on
This method can be as simple as writing down expenses in a notebook.
different types of bills. First you label envelopes with each category in your budget.
Alternatively, you can use money-management software that tracks both income
Then you place only the budgeted amount of cash in each envelope. This method
and expenses automatically. Be sure to periodically review the log to get an idea of
keeps you from overspending because when the cash is gone, you can’t spend in
how much money you need on a daily, weekly, or monthly basis. By writing down
that category. It may help to write on the envelope what you spent the cash on
expenses, you’ll see exactly where your money is going and can cut down on
each time you take money from it.
unnecessary expenses.

Summary
What is important to consider when thinking about financial goals?

Life is unpredictable, and expenses can be too. Saving money can help you prepare for unforeseen
circumstances and help you achieve your dreams. Defining your goals assist you in achieving the
things that are most important to you. When creating financial goals, consider how much money, time,
and effort it takes. It is important to stay flexible because life is unpredictable. Review your financial
goals often. Finding ways to be prepared for life events is essential for financial security.

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