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Financial Planning Courses: Lifestyle Planning/Setting Financial Goals

Introduction to Lifestyle Planning/ Setting Financial Goals Choose Your Path after High School Setting Financial Goals Your Financial Goal Roadmap Summary of Lifestyle Planning/ Setting Financial Goals
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Your Financial Goal Roadmap

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Your Financial Goal Roadmap

With the foundation in place for how to set short, intermediate and long-term SMART (specific, measurable, attainable and action-oriented, realistic, time) financial goals, it’s time to begin defining your financial future. An important part of setting financial goals is determining what your financial needs versus financial wants are. As discussed earlier we all have financial needs to plan for so that we can live a reasonable lifestyle. Unless someone is independently wealthy and money is no issue, most of us need to make decisions about our needs and wants. In general, needs should be taken care of before spending money on wants. Trade-offs exist when making a decision to spend money on a want. It’s important to understand what those trade-offs are.

Take a look at the needs and wants illustration below to bring this concept to life.

Illustration of needs and wants

Generally speaking, there is a financial tradeoff or give-up when you choose a want over a need. While these are hypothetical examples, we all experience these choices on a very regular basis. Even the daily Starbucks latte at $4 vs. making coffee at home at $.50 and bringing it in a go cup can create a meaningful tradeoff. If you have coffee five days a week for 52 weeks, you will save $910 per year if you make this change. As you begin to define your goals, be aware of what you need compared to what you want. Your choices can have a significant impact on your financial situation.

Put your goals into action

Detailed below is a tool you can use to help you set your financial goals. Review the tool, then click on the link below the table to complete this goal-setting activity for real. You can also refer back to the examples provided earlier in the course to assist with your goal-setting process. An enlarged version of this graphic can be downloaded here.

Financial road map

Click here to download the goal-setting worksheet.

Monitoring and revising your goals

Once you put your SMART financial goals into action, you have a high likelihood of achieving them. It is also important to monitor your progress toward achieving your goals to help you stay on track. Keep the following items in mind to monitor your progress:

  • Once you begin committing a monthly savings amount to various goals, be sure to monitor your budget closely to determine you haven’t allocated too much or too little to your goals. Adjust your budget accordingly.
  • Check your balances in your savings or investment accounts quarterly to see if you are on track to achieve your goals.
  • If you get a raise, determine if you can increase the amount you are saving.
  • Be sure you have a cash reserve in place to handle unexpected expenses before committing money to other goals.
  • Consider working with a financial advisor to help select investments for your longer-term goals. Be sure they review your investments with you annually to ensure they are still appropriate.