PF: 1.03 - Setting Financial Goals

SMART Goal (S = Specific)

A clearly defined end result. When writing a SMART financial goal state exactly what plan you have for the money involved Example: "I will reduce the amount I owe on my car loan."

SMART Goal (A = Attainable)

One that you know is possible to achieve. When writing a SMART financial goal create a step‐by‐step plan that outlines exactly how the goal can be reached. Example: "I will reduce the amount I owe on my car loan by $1,000 by paying an extra $100/month."

SMART Goal (T = Time Bound)

Simply means you'll achieve your goal within a certain time frame. Example: "I will reduce the amount I owe on my car loan by $1,000 in 10 months by paying an extra $100 per month."

Goal

Something a person intends to acquire, achieve, or accomplish in the future.

Financial Goals

This includes someone achieving their short and long‐term spending decisions because they force someone to identify their priorities.

Financial Planning

This includes the process of continuously managing one's finance throughout their whole life.

SMART Goal (M = Measurable)

When someone can easily determine when the goal has been met and whether you are making progress toward its completion. When writing a SMART financial goal, state the exact dollar amount involved. Example: ""I will reduce the amount I owe on my car loan by $1,000."

What is a SMART Goal?

A SMART Goal is a way to organize one's goal to make it more "Specific, Measurable, Attainable, Realistic, and Time Bound."

SMART Goal (R = Realistic)

Examine the consequences of your goal in terms of its opportunity costs, that is, the value of the next best alternative that you will give up as a result of your plan. Are you willing to give up what is necessary to achieve your goal? Example: Instead of saving $100/month, the money will go towards paying off my car loan. The second best alternative is saving the $100.