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Setting Goals

Turn your hopes, wants, and dreams into reality by setting and achieving goals.

At a glance This module can help you create a plan to fulfill your dreams by learning how to set, adjust, and reach your short-term and long-term goals.

 Setting SMART goals

 Putting goals into action

 Planning for life events and large purchases

 Revising your goals

Introduction

Everyone has a different idea of the future they want to build.

What do you want to accomplish in the near future?

What do you want for yourself and your family in the long term?

These ideas of your future are your hopes, wants, and dreams. But they don’t just happen on their own.

Accomplishing your dreams means thinking about the money you need to help make them come true.

It’s also important to think about your values, the things that are meaningful to you and your family.

Your values help shape how you prioritize what you do with your time, energy, and even money.

If your goals support your values, you’ll be more likely to prioritize them, which gives you a greater chance of accomplishing them.

Setting goals along the way is a good strategy to help you achieve your dreams.

Some goals may take a few weeks or months to reach, like saving money to buy gifts for the holidays or buying a new mattress. These are short-term goals.

Others may take many months or even years to reach, like sending your child to college or paying off a large debt. These are long-term goals

 

Hopes and dreams can be turned into goals

While hopes and dreams can motivate us, they’re often open-ended or vague.
That makes it hard to build a plan to reach them. For example, most people say
they want to make a better life for their children. But you have to think about the
specifics of what “a better life” means for you, in order to build a plan to get there.
That plan can be made up of one or many smaller goals. When you set goals,
you can:
• Work toward making your future better
• Prioritize how you spend your money so that it goes toward things that really
matter to you
• Measure and track your progress toward getting the things you want out of life
• Take pride in bettering your life and the life of your family

Creating effective goals

It’s great to set goals. It’s even better to set SMART goals. Using the SMART goal
method brings structure to your goal setting. This makes it much more likely that
you’ll be able to achieve your goals.

All SMART goals have five characteristics: they are (S)pecific, (M)easurable,
(A)chievable, (R)elevant, and (T)ime bound. Each part contributes to why this
method is effective in goal setting.

SPECIFIC

A specific goal has a much greater chance of being met than a general one
because it provides something defined to reach for. For instance, it’s much easier
to plan a trip to Boston than it is to plan a trip “to the east coast.”

MEASURABLE

You should be able to track your progress toward meeting the goal. Otherwise, it
will be difficult to determine if you are going to achieve it. For instance, “Save $5 a
week” is measurable. “Save more money” is not.

ACHIEVABLE

You might want to get out of credit card debt tomorrow or become a millionaire
within a year, but for most of us, those are unrealistic goals. That doesn’t mean that
your goals should be easy. Your goal may be a stretch for you, but it should not be
extreme or impossible. If the goal feels like too much of a stretch, try breaking it
down into smaller, more achievable goals.

RELEVANT

Set goals that matter to you and are a priority in your life. This makes it more likely
you will prioritize the time and effort it takes to achieve them.

TIME BOUND

Goals should have a clearly defined time frame, including a target or deadline date.

This helps ensure they are measurable and that steps are taken to reach the goal by
the target date.

 

Setting goals for life events and large purchases

People often put off planning for large purchases or significant life events because
they’re struggling just to make ends meet today. Or don’t think they have enough
money to save.

But if you don’t plan ahead for how you’re going to meet these goals, you won’t
have the money to achieve them. This can add even more stress and uncertainty at
times when a large purchase is necessary or life takes an unexpected turn.

Planning in advance for large purchases not only helps you better achieve your
goals, but helps remove anxiety around the purchase.

Large purchases may include things like:

• Training or educational expenses

• Tools or equipment you need for your job

• A car or home

There are also goals around things that happen in your life.

Some of these life events are planned, while others happen without much warning.

Creating goals around these events in advance helps you better achieve what you want and
reduces stress when difficult life events do occur.

Since many of these events happen later in life, it can give you more time to plan for them. This also means you
can save smaller amounts over a longer period of time.

Here are just a few examples of the types of life events people experience that may
require saving for in advance:

• Moving in with a partner, getting married, getting separated, getting divorced,
or becoming widowed

• Birth or adoption of a child

• Illness or short- or long-term disability

• Loss of a job (covering the gap unemployment benefits don’t cover)

• Celebrating a landmark birthday or anniversary, accomplishment, or rite
of passage

• Death of a family member

• Retirement

• Your own final expenses

 

This module has three tools and a handout to help you create a plan for reaching
your short-term and long-term goals. It also teaches you how to readjust your goals
and reevaluate the plan to achieve them as needed.

Here are suggestions for how to make the most of the time you have.

If you have…

10 MINUTES
• Use “Setting SMART goals” to identify goals that will help you plan for and
attain the things that matter most to you

30 MINUTES
• Complete “Setting SMART goals”
• Use “Putting goals into action” to create a plan to achieve your goals

MULTIPLE SESSIONS
• Use “Planning for life events and large purchases” to help you develop a plan
to pay for things like a big celebration, a car, or your child’s college tuition
• Follow up to see if progress is being made toward your goals
• Use the “Revising goals” handout to update or revise goals as needed

Setting SMART goals

Setting goals is the first step toward achieving your dreams.

This tool teaches you how to effectively set goals that
are SMART—meaning they are

(S)pecific,

(M)easurable,

(A)chievable,

(R)elevant, and

(T)ime bound

SMART goals provide an easy-to-follow structure for creating goals.

This helps you
really break down what you want into a format that makes it simpler to plan for, track,
and ultimately achieve your goals.

To create your goals, first think about your values. When your goals match up with
the values that are important to you and your family, you’re more likely to prioritize
achieving them.

If you’re not sure what your goals are, think about what you want to change in your life.

See if there’s a goal you can create that would help bring about that change.
It’s likely there are many things you want to achieve. But if you can focus on one or two
priorities that align with your values, you’ll have a better chance of reaching that goal.

What to do

List your values to help you think about what is important to you and your family.
Brainstorm a list of dreams and goals.

Remember, dreams are aspirational and
usually vague. Goals are specific things you can achieve to help you reach
your dreams.

Create a SMART goal from one or two items on your list of goals. Write down
what makes this goal specific, measurable, achievable, relevant, and time bound.

A step further

After you’ve written down your SMART goals, take a look at the “Putting goals into
action” tool to create an easy-to-follow plan for achieving your goals.

Download

BUILDING BLOCKS STUDENT WORKSHEET
Setting a SMART savings goal
Setting financial goals can motivate you to save money. When
these goals are SMART, you’re more likely to achieve them.
Instructions
1. Review the elements of a SMART goal.
2. Write a short-term savings goal.
3. Add details to make it a SMART savings goal.
4. Create a savings target and determine how much you’ll need to save each week.
5. Create an action plan to achieve your SMART goal.
What is a SMART goal?
SMART is an acronym that means: Specific, Measurable, Attainable, Relevant, and
Timebound.
Imagine you’ve set a goal to save money. This goal is vague and there’s no way to
tell when success has been reached. But look what happens when you make the
goal SMART:

Setting targets

Setting targets helps to make sure your SMART goal is attainable and timebound.

Example: You want to save $400, you’d like to take 20 weeks to do it, so you’ll need to save $20 each week.

$400 (total amount) ÷ 20 (weeks)
= $20/week

Making an action plan

Identifying specific action steps may help you meet your SMART goal targets

Examples of ways you may save money include: Bringing snacks from home
instead of purchasing them ($5/week), or picking up two extra work hours
($15/week).

download

Before you can accomplish a goal, you need a plan for how to achieve it.

This tool helps you turn your SMART goals into an easy-to-follow action plan.

All goals take time and commitment to achieve.

One of the most effective ways to accomplish your goals is to create an action plan outlining the steps you’ll take.

Many goals also require external resources to achieve.

These resources could include needing information, tools, transportation, or even a professional financial coach or
counselor to help you.

These kinds of resources should be added to your action plan.

Research shows that people who write down specific goals are much more likely to reach their goals than if they don’t write them down.

Sharing those goals with a friend and checking in with them regularly about your progress also increases the chances
that you’ll reach your goals.

What to do

Break up your goal into small, actionable steps.

Write each step in a separate box.

Consider what resources you will need to take each step and write them next to that step.

Set a deadline for each step’s completion.

Think about sharing your progress with a friend or family member. Add their name next to the step and how often you will check in with them.

This can help keep you motivated.

 

Putting goals into action

download

Planning for life events and large purchases can help you save for them.

Planning makes it easier to achieve long-term goals, like buying a car or having a wedding.

This tool helps you thinkvabout what you want to achieve and how you can get there.

Think about the life events you are likely to experience and the large purchases you might need to make. For most people, saving and starting early can make it easier.

If you, like some people, end up borrowing money to make a big purchase, you can save in interest and fees if you have savings to cover some of the costs.

You can also think about creative ways to save money.

What to do:

Brainstorm a list of expenses using the categories at the top of the tool as a guide.

Consider when you are likely to experience various life events (like a graduation party or having a child) or when you expect to make large purchases.

Research and estimate the actual costs.

Add in any associated expenses (like the interest you might pay on a car loan).

If the life event or purchase is likely to happen more than five years from now, remember that the cost of almost everything increases over time, so add some extra money to the cost to cover this.

Identify how much you might borrow versus how much you’ll need to save.

Many large purchases require a combination of borrowing and paying a portion up front.

Identify ways to keep the costs as low as possible. For example, for a large party, you could save by asking family and friends to help you prepare food rather than hiring a catering company.

You can also research when items are most likely to go on sale or ask for discounts. It may only be 5% or 10% off, but these can add
up!

download

Planning for life events and large purchases

Planning makes it easier to achieve long-term goals, like buying a car or having a wedding.

This tool helps you think about what you want to achieve and how you can get there.

Think about the life events you are likely to experience and the large purchases you might need to make.

For most people, saving and starting early can make it easier.

If you, like some people, end up borrowing money to make a big purchase, you can save in interest and fees if you have savings to cover some of the costs.

You can also think about creative ways to save money.

What to do:

Brainstorm a list of expenses using the categories at the top of the tool as a guide.

Consider when you are likely to experience various life events (like a graduation party or having a child) or when you expect to make large purchases.

Research and estimate the actual costs. Add in any associated expenses (like the interest you might pay on a car loan).

If the life event or purchase is likely to happen more than five years from now, remember that the cost of almost everything increases over time, so add some extra money to the cost to cover this.

Identify how much you might borrow versus how much you’ll need to save.

Many large purchases require a combination of borrowing and paying a portion up front.

Identify ways to keep the costs as low as possible.

For example, for a large party, you could save by asking family and friends to help you prepare food rather than hiring a catering company.

You can also research when items are most likely to go on sale or ask for discounts. It may only be 5% or 10% off, but these can add
up!

download

Revising goals.

Goals aren’t something you can “set and forget.”

You need to revise them as the situation changes or you may find yourself off track.

Here are some common reasons you may need to adjust your goals and some tips for how to revise them.

MY CIRCUMSTANCES HAVE CHANGED

When your circumstances change due to life events (such as losing or getting a job, earning more money, having a child, having a health emergency, etc.), review your new situation with your goals.

 Ask yourself:

• Do these goals still match up to my current circumstances?

• Are these goals still attainable with this new circumstance?

• Could my circumstance help me reach these goals faster?

• Could my circumstance make me reach these goals more slowly?

 Take action

As circumstances change, your priorities may also shift.

For example, if you lose your job, you might change your goal of saving for a nicer car to a goal of making sure that the car you have continues to run well.

If it’s a critical goal that can’t be adjusted, you can look at adjusting other goals to ensure you have enough money to fund the more critical one.

If your circumstances change for the better and you have extra money to put toward a goal, like from a tax refund or an inheritance, think about putting some of the lump sum toward one of your savings goals. This can help you reach that goal faster.

I CAN’T MEET MY WEEKLY SAVINGS GOAL

If you come up short of your savings goal each week, that doesn’t mean you should stop saving.

You may just need to adjust your goal.

 Ask yourself:

• Can I change the total amount I’m trying to save?

• Can I change the length of time I have to save for my goal?

 Take action

Let’s say your goal is to buy a new $600 TV three months from now.

One month into saving, you have some unexpected medical bills and can no longer afford to save as much each week.

You can choose to buy a less expensive TV two months from now, meaning you need to save less money overall.

Or you could choose to wait six months to buy the $600 TV, meaning you have longer to save.

Either way you adjust your goal, the amount of money you need to save each week is reduced.

And you can still save enough to buy the TV.

I’VE USED UP MY EMERGENCY SAVINGS

If you’ve used your emergency savings, then they’ve served their purpose.

But now it’s time to replenish them.

 Ask yourself:

• Should I change how much I save each week for my emergency fund?

• Should I revise any other goals?

 Take action Determine how much you want in your emergency savings and by when.

Calculate the amount you need to save weekly or monthly to meet that goal and start saving.

 Think about where your priorities are and how you may be able to adjust the total amount or length of other saving goals.

MY GOAL DOESN’T FEEL IMPORTANT ANYMORE

Sometimes circumstances change and a goal no longer feels important.

And that’s OK. If the goal you set before no longer feels right for you, set it aside and make a new goal that does feel right.

 Ask yourself:

• Does this goal still support my values?

• What’s important to me now?

 Take action Create a new goal that is important to you now.

You can always add existing savings from the old goal to something new.

Remember, setting goals and working toward them is a process that never really ends.

If one of your goals has been achieved, it’s time to start the process again and set a new goal.

Think about what you want for yourself and your family and keep working to achieve your goals.