Personal Finance: 10.1, 10.2, & 10.3

financial goals

Specific monetary objectives set to be achieved within a defined time frame

fixed expenses

Expenses that stay constant over a period of time

• car insurance

• mortgage

• health insurance premium

personal budget

A projection of income and a plan to use that income to pay estimated expenses, and to plan for savings and investments

variable expenses

Expenses that vary month to month, or that are discretionary, or that are unexpected

• electric bill

• groceries

• entertainment

importance of financial goals

• provides you with direction and purpose

• offer motivation by clarifying what you’re working towards

• lead to better decision making

SMART goals

SPECIFIC

• goals should be clear and specific

MEASUREABLE

• include criteria to measure progress

ACHIEVABLE

• goals should be realistic and attainable

RELEVANT

• goals should be important and have impact

TIME-BOUND

• set deadlines to create urgency

types of financial goals

short term (1 year)

• saving $500 for a new laptop

medium term (1 to 5 years)

• saving $10,000 for a car

long term (5 years or more)

• saving for a house

making use of your financial plan

1. creating a plan

2. implementing the plan

3. monitoring progress

4. staying flexible

5. utilizing tools and resources

6. celebrating milestones

budgeting methods

envelope system

• allocating funds for specific categories using envelopes

zero based budgeting

• every dollar goes towards a specific purpose

50/30/20

• 50%: needs

• 30%: wants

• 20%: savings

apps and digital tools