CHAPTER 1

PART 2
DEVELOPING PERSONAL FINANCIAL GOALS

• Setting short-term, mid-term, and long-term financial goals is an important step toward
becoming financially secure.
• If you aren’t working toward anything specific, you’re likely to spend more than you should.
• You’ll then come up short when you need money for unexpected bills, not to mention when
you want to retire.
• You might get stuck in a vicious cycle of credit card debt and feel like you never have enough
cash to get properly insured, leaving you more vulnerable than you need to be to handle some
of life’s major risks.
ANNUAL FINANCIAL PLANNING…

• Gives you an opportunity to formally review your goals, update

them, and review your progress since last year.
• If you’ve never set goals before, this planning period gives you
the opportunity to formulate them for the first time so you can
get—or stay—on firm financial footing.
KEY TAKEAWAYS
• Proper financial and retirement planning starts with goal setting, including
short-, intermediate-, and long-term goals.
• Key short-term goals include setting a budget and starting an emergency
fund.
• Medium-term goals should include key insurances, while long-term goals
need to be focused on retirement.
TYPES OF FINANCIAL GOALS

• Two factors commonly influence your aspirations for the future.

• The first is the time frame which you would like to achieve your
goals.
• The second is the type of financial need that drives your goals.
TIMING OF GOALS

• What would you like to do tomorrow?

• Believe it or not, that question involves goal setting.
• Here are goals, from near-term to distant, that financial experts
recommend setting to help you learn to live comfortably within
your means and reduce your money troubles.
SHORT-TERM FINANCIAL GOALS

• Are goals to be achieved within the next year or so,

such as saving for a vacation or paying off small debts.
• Setting short-term financial goals can give you the
confidence boost and foundational knowledge you need
to achieve larger goals that will take more time.
INTERMEDIATE GOALS
• Have a time frame of two to five years.
• Once you’ve created a budget, established an emergency fund, and paid off
your credit card debt—or at least made a good dent in those three short-
term goals—it’s time to start working toward mid-term financial goals.
These goals will create a bridge between your short- and long-term
financial goals.
LONG TERM GOALS
• Involve financial plans that are more than five years off, such as retirement
savings, money for children’s college educations, or the purchase of a
vacation home.
• Long-term goals should be planned in coordination with short-term and
intermediate ones.
• The biggest long-term financial goal for most people is saving enough
money to retire.
SETTING AND ACHIEVING SHORT-TERM GOALS IS
COMMONLY THE BASIS FOR MOVING TOWARD
SUCCESS OF LONG-TERM GOALS.

• For example, saving for a down payment to buy a house is a short term goal that can be a
foundation for a long-term goal: owning your own home.
• Goal frequency is another ingredient in the financial planning process.
• Some goals, such as vacations or money for gifts, may be set annually.
• Other goals, such as a college education, a car, or a house, occur less frequently.
GOALS FOR DIFFERENT FINANCIAL NEEDS
• Consumable –product goals – usually occur on a periodic basis and involve items that are
used up relatively quickly, such as food, clothing, and entertainment. Such purchases, if
made unwisely, can have a negative effect on your financial situation.
• Durable-product goals – usually involve infrequently purchased, expensive items such as
appliances, cars, and sporting equipment; these consist of tangible items.
• Intangible purchase goals – these goals may relate to personal relationships, health,
education, and leisure. Goal setting for these life circumstances is also necessary for your
overall well-being.
GOAL- SETTING GUIDELINES

• An old saying goes, “If you don’t know where you’re going,
you might end up somewhere else and not even know it.”
• Goal setting is a central to financial decision making.
• Your financial goals are the basis for planning, implementing,
and measuring the progress of your spending, saving, and
investing activities.
FINANCIAL GOALS AND ACTIVITIES FOR
VARIOUS LIFE SITUATIONS
• Common Financial Goals and Activities
• Paying off debt.
• Saving for retirement.
• Building an emergency fund.
• Buying a home.
• Saving for a vacation.
• Starting a business.
• Feeling financially secure.
 UNDERSTANDING THE 5 FINANCIAL STAGES OF LIFE

• “I wish I was a child again, so I don’t need to worry about paying bills.”
• Such is the phrase of many people going through that point in life known in media as
“adulting”- or being responsible enough to actually care about where your money goes.
• Whether we like it or not, money is inseparably connected to our life. In financial
perspectives, money should not be the root of all evil.
• Money is what you make to have the finer things in life, not necessarily to make you rich
—but something you need to have security so you and your family can have a
comfortable life, plus some extra perks.
GOING THROUGH DIFFERENT MILESTONES IN
LIFE ALSO CALLS FOR DIFFERENT
ASPIRATIONS.
• What you dream as a child is not the same when
you reach college.
• What you may have aspired in your twenties has
now changed in your forties.
MANY OF US WERE NOT REALLY EDUCATED IN
SCHOOL WHEN IT COMES TO HANDLING
MONEY.
• Majority of graduates who go into the workforce barely have any idea
regarding the habits they should develop the moment they receive their
first paycheck.
• Only a few are actually aware of how important it is to set their financial
goals.
• This topic will equip yourself with basic knowledge about the right
attitudes toward your finances according to your life stage.
STAGE 1: ENTERING THE WORKFORCE – EARLY
CAREER YEARS
These are the things you must accomplish during your early career years:
• Build your savings and establish a good credit history.
• Avoid increasing your consumer and high interest rate debts any further and pay
the outstanding ones as soon as possible.
• Live within your means.
• Start thinking about your retirement and set up your financial accounts.
• Get disability insurance.
STAGE 2: FAMILY AND CAREER BUILDING
YEARS
In this life stage, your goals should include:
• Buying life insurance.
• Purchasing health insurance.
• Updating your disability insurance.
• Reviewing your estate plan and preparing your will.
• Saving for your child’s college education.
• Starting your own business or building your career further.
• Growing your savings.
STAGE 3: THE PRE-RETIREMENT YEARS

• First off, you should already be on your way to getting done with paying off your mortgage and other debts.
• You must be confident that you have enough money to send your kids to college without having to apply for additional loans.
This may only strain you in your retirement years if you will still have to pay student loans.
• You must also begin reviewing your options of reducing your taxes at retirement. Most income sources in retirement are
taxed. You need to minimize your taxes so you can maximize your assets, and also ensure that you have a good plan that will
sustain you for 20 or so years after retirement.
• This is also a good time for you to start a business if you haven’t done so prior. Even when you have already set aside some
cash to last you for 20 years, take into account inflation, and the idea of still doing something productive after retirement.
This way you are able to continue growing your savings through your business or potential services that you can provide.
• This is also the stage when planning for retirement becomes more serious. Look into your portfolio and see whether or not
you are on the right track. If there are discrepancies between your plan and situation, you can immediately look for solutions.
STAGE 4: EARLY RETIREMENT YEARS

• Are you now in your early retirement years?

• First, have a clear idea about your potential expenses during retirement. How much will you be spending monthly now
that you are at a whole different point in your life?
• Second, it is crucial to update your will and evaluate your estate plan! You want to leave a great legacy to your family,
right? After having spent 20 to 40 years growing your wealth, you will need to look for wise ways to leave your family
with a big estate.
• Next, strategically turn your retirement and pension savings to income. With that also comes ensuring that you avoid the
tax paid at retirement.
• With the help of a financial planner, you will learn that there are strategies to reduce the tax friction that comes with most
retirement benefits.
• The objective here is to ensure that your savings will last longer.
STAGE 5: LATER RETIREMENT YEARS

• Make arrangement for long-term health care

coverage
• Review will and estate plan
• Plan retirement living facilities, living expenses,
and activities
Your financial goals should be stated to take the
following factors into account…
1. FINANCIAL GOALS SHOULD BE REALISTIC

• Financial goals should be based on your income and life

situation.
• For example, it is probably not realistic to expect to buy
a new car each year if you are a full-time student.
2. FINANCIAL GOALS SHOULD BE STATED IN
SPECIFIC, MEASURABLE TERMS

• Knowing exactly what your goals are will help you create a plan
designed to achieve them.
• For example, the goal of “accumulating Php50,000 in an
investment fund within three years” is a clearer guide to
planning than the goal of “putting money into an investment
fund.”
3. FINANCIAL GOALS SHOULD HAVE A TIME
FRAME

• In the preceding example, the goal is to be

achieved in three years. A time frame helps you
measure your progress toward your financial
goals.
4. FINANCIAL GOALS SHOULD INDICATE THE
TYPE OF ACTION TO BE TAKEN

• Your financial goals are the basis for the various

financial activities you will undertake.
• For example, “Reducing credit card debt” will
usually mean decreased use of credit.
ACTIVITY NO. 2 CREATING FINANCIAL GOALS

• Based on your current situation or expectations for the future, create two financial goals,
one short-term and one long-term, using the following guidelines:
Step 1. Create realistic goals based on your life situation.
a. Short-term goal ______________________________________
b. Long-term goal _______________________________________
CONTINUATION…
Step 2. State your goals in specific, measurable terms.
a. _____________________________________________
b. _____________________________________________

Step 3. Describe the time frame for accomplishing your goals.

a. ______________________________________________
b. ______________________________________________
CONTINUATION…
Step 4. Indicate an action to be taken to achieve your goals.
a. _______________________________________________
b. _______________________________________________

Note: Deadline of submission will be on or before September 25, 2020.

You can send your output through PM (Messenger) or email
(peakadvisor.2016@gmail.com)