Lesson 1: Getting Started

MYM-1-03

What Do You Want to Do With Your Money?

To manage money, it is necessary to take a look into the future, see where you want to be, so you can plan how to get there. Families set their financial goals based on their values. One family’s goal list will be different from another family. Here are some examples of goals:

• own my own home

• pay off all debts

• college for my children

• take a family vacation

• set up an emergency fund

TIP: Financial planners generally recommend that at least 10 percent or more of your take-home pay should be going towards your savings goals each month.

Think About Your Goals. Financial goals are the specific things you want to do with your money within a certain period of time. Goals give you purpose for the way you will spend your money today and tomorrow. Goals give targets for different periods in the future.

• Short Term Goals can be done soon. Perhaps in a week, or a few months, but no longer than a year. Examples: Buy new clothes, save for a vacation.

• Intermediate Term Goals can be accomplished in 1 to 5 years. Examples: Buy a new car, pay off debts.

• Long Term Goals look ahead 5-10 years and longer. Examples: Buy a house, put children through college, retire.

To increase your success, follow these principles:

1. Set realistic goals. Ones that are set too high may frustrate you and cause you to give up your plans. Maybe it is impossible to save $100 a month right now, try for $25. If a new car is beyond your means, would a used model meet your needs?
2. Be specific. State your objectives in detail. If goals are vague, they may never be achieved, and others in your family may have different ideas of what the goals really are. An example is: "If we save $100 a month for the next 12 months, we would have $1,200 for the emergency fund."
3. Be flexible. Plans may require adjustments as your income and life cycle change. Don’t be so rigid that you have to start over with an entirely new plan. For example: An unexpected expense comes up. You can’t save the entire $100 this month. Don’t let that get you off track. Continue to set aside something towards your goal, no matter how little it might be.

More Thoughts on Goals. You and your family probably have some ideas about the things you want in the future. An advantage of setting goals is that you have something to work towards. People can get so caught up in day-to-day problems they end up accomplishing very little towards intermediate and long term goals. A lack of financial planning can mean problems sometime in the future.

A goal may require resources other than money to achieve. Your resources include: time, talents, and abilities. In order to achieve some goals you may decide you need to earn more money; and in order to do that you may need more training or education which requires time and talents, as well as expense.

Setting Your Family Goals. How many goals will you list? It just depends on your family’s needs, wants, and desires. Included with this lesson is Goal Worksheet 1-D. It will help you plan family goals. Take time to write down your goals so you can see what is really important to you and your family and what you want for your future.

One example of an important goal in all households is the Emergency Fund, as outlined in the sample below. It is specific with dates and amounts. Discussions identify the obstacles and involve the entire household in the commitment to the goal. Step by step the plan outlines how this will be accomplished.

Goal #1: Emergency Fund (a sample)
Target Date	Total Cost	Amount Already Saved	Amount to Save Each Month
6 months from today	$800 1 month expenses (minimum); up to 3-4 months expenses desirable	$200	$800 - 200 = $600 $600/6 months = $100 month
Obstacles to overcome: other demands for current expenses other goals and priorities current spending habits limited amount of money coming in each month an emergency fund has not been a priority before defining what is an emergency
Step 1: Save all loose change for the emergency fund
Step 2: Use coupons and put savings into emergency fund
Step 3: Pack lunch at least twice each week and put savings in fund
Step 4: Put half of all cash gifts received into fund

If an Emergency Fund is a goal for your household, the sample is a model to adapt to your amounts, obstacles, and plan.

Now it’s your turn. Take time to seriously think about and discuss what you want for the future. On a separate paper list the goals important to you and your family. Listing goals is usually not hard. The more difficult task is to rank your goals. Identify your highest priority goal and label it "1." Place a 2 on the second highest and continue until you rank each goal on your list.

Next, copy Worksheet 1-D: Goal Setting. There is space for two goals on the sheet. Use a pencil. You can adjust the goals as needs and circumstances change. Discuss obstacles and step by step plans. Determine the monthly savings for your goals. The Total Cost minus the Amount Already Saved = Balance needed. Divide by months to Target Date to determine the Amount to Save Each Month.