How do I set financial goals?

What are financial goals? They are things you want to do or buy that cost money. Setting financial goals is a three-part process: 1 Define your financial goals. 2 Make a plan to achieve them. 3 Take action until your goals become real. Examples: • Pay down $1,800 of debt in 12 months. • Save $5 in loose change every week for the next 12 months to build an emergency fund.

Notice that each example has a time frame (for example, 12 months) and dollar figures (for example, $5 every week). This helps turns goals into SMART goals.

Specific:	“I want to save loose change every week” is more specific than “I want to save money.”	Examples of SMART FINANCIAL GOALS • To pay down my credit card with an $1,800 balance in 12 months, I must make $165 payments every month at a 17.5% APR and no annual credit card fee. • $5 per week, or $20 per month, saved over 12 months will grow to $260. If I deposit my $5 in a savings account each week, it will grow to more than that because of interest.
Measurable:	“I want to save $5 a week” is measurable; “I want to save money” is not.
Achievable:	“I can save $5 a week” is easier to achieve than “I am going to save $100 a week,” especially if you are tight on money.
Realistic:	“I am going to pay down my debt in 12 months” is more realistic than “I'll pay down my debt when I win the lottery.”
Time bound:	"I am going to pay down my debt in 12 months” is a better time frame than “I will pay off my debt by the fall.”

Making SMART goals to improve your finances will ultimately help you improve your credit. Making goals is sort of like creating an action plan for how you want to spend your money. Financial goals help make spending money work for you and not against you!

Financial goals can be grouped by time frame:		Click here to use "My SMART Financial Goals Worksheet" to list your short-term, medium-term, and long-term goals. >> Include the estimated cost of achieving the goal and the required amount of weekly savings.
Short Term Goals	These are goals you plan to meet in three months. For example: "I will make monthly credit card payments of $31 for four months to pay off a $120 emergency car expense I had to charge at a 17.5% APR and no annual credit card fee."
Medium-Term Goals	These are goals you plan to meet in three to 12 months. For example: "I will save $1,200 in 12 months to make a down payment on a car. That equals saving $100 per month."
Long-Term Goals	These goals take more than a year to achieve. For example: "In two years, I will complete course work that will allow me to get my barber’s license. This license will allow me to increase my income by $250 per week, or $1,000 per month."

What factors influence financial goals?

Many things influence what you consider important in life. And what you think is important will influence your financial goals:
• Your age
• Advertising and TV commercials
• Family
• Friends
• Your values

Your values are personal beliefs about things that are important to you. Every person has different values. What's important to you may not be important to a close friend or family member. This is OK! When you set your goals, make them your own—base them on what you think is best for your life, not what somebody else thinks is important.

Here are examples of what people value:		Be sure to include “improve my credit” as a financial goal. You’ll soon learn ways to do that. For now, start thinking about: • Paying all bills on time every month • Paying down credit card balances • Building an emergency fund
•	Serving their community
•	Advancing their education
•	Improving their credit
•	Saving money
•	Achieving personal goals such as learning a new skill or getting a better-paying job
•	Personal appearance (such as nice clothes)
•	Social recognition