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Setting Financial Goals

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Setting Financial Goals

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With the New Year quickly approaching, this is a great time to evaluate your plans and set new goals for 2021. The beginning of a new year can be a good mental reset – a time to focus and push yourself toward achieving better things. Most people set new goals for fitness, work and education. Teenagers typically don’t think of setting goals related to money, but financial goals are important too.

The Center for Financial Empowerment, our nonprofit founded to teach smart money skills to high school youth, believes learning about money early changes lives. Teaching young people to set financial goals is a key component to establishing healthy habits with money early on.

Here are some helpful steps that teens – and adults – can take to set effective financial goals:

steps
1 Put your goals on paper

Goals that stay in your head are simply dreams. Goals become most effective when they’re written down or printed out. Put them in a prominent location where you’ll see them frequently, like your bedroom mirror or the refrigerator door. Take a photo and make it your phone lock screen. Read them daily to remember what you’re working toward.

2 Use the SMART acronym to make goals

Specific – State exactly what’ll be done with the money involved.

Measurable – Set an exact dollar amount involved.

Attainable – Create a step-by-step action plan for how the goal will be achieved.

Realistic – Think through the trade-offs and opportunity costs to make sure you can reach the goal.

Time-Bound – Set a specific date the goal will be reached.

For instance, it’s not enough to say “I’ll save money for a car,” that’s just too vague. A SMART goal might say “I’ll save $3,000 to buy a car in 12 months by getting a part-time job and saving $250 each month.”

3 Frequently evaluate your goals and make adjustments, as needed

Think of your goals as a living document. Things rarely ever go as planned, so   you’ll need to make adjustments as life changes. Perhaps you get extra hours at your job and can save more than you planned each month. Or maybe an unexpected expense comes up and you need to push your deadline back a few months. Don’t let life’s changes make you give up on your goals, simply adjust and keep going.

4 Make your goal public

When other people know you’re working towards a goal, they can help cheer you on and keep you accountable. Share your goal with trusted family members and friends, then ask them to check in with you periodically to see how you’re doing. People who care about you will want to see you succeed, and they’ll celebrate with you when you achieve your goal.

Don’t let the disappointments of 2020 get you down. Set new goals for 2021, make an effective plan and see what great things you can accomplish.

Help us empower the next generation for financial success! 

The Center for Financial Empowerment is a 501c3 nonprofit organization whose mission is to empower disadvantaged youth through financial literacy education. Find out more about our work at Center4FE.org.