A presentation by Luke Erickson, University of Idaho Extension Educator, on how to set and reach financial goals. This includes setting allowances, using accountability partners, writing down our goals and values, helping members of our household do the same, understand money personalities, make household goals SMART goals, and plug spending leaks.
1. Reach your Financial Goals
Luke Erickson
By the end of this module you
should be able to:
•Designate a financial
accountability partner
•Create a list or written
and prioritized goals
•Make your top five
goals, SMART goals
9. Household goals
• Tonight…
– Have spouse & kids write down their goals
– Equal opportunity to meet goals
– Find a way to compromise and support each other
fairly.
• Take turns
• Set allowances.
10. The art of compromise
• Will your lists be the same?
14. SMART goals example
• - $50 bike vs $3000 bicycle
• - Balance quality with affordability
15. SMART goals practice
• Specific: Diamondback 2013 Overdrive V with 29-inch
wheels.
• Measurable: $399.99 on Amazon.com with free
shipping.
• Agreed Upon: Accountability partner agrees that this is
a reasonable large purchase.
• Realistic: This price is realistic for my budget, and suits
my needs.
• Time-based: If I save up $100 a month I can purchase
this bike in four months.
• Practice making your own SMART goal.
16. SMART Goal Setting Worksheet
Goals Rank Amount Buy
Needed Date
New
2
$800
Nov.
TV
Months Starting Monthly
to Save
Date
Savings
6
March
$100
16
17. There’s no such thing as NO!
• When you communicate and work together
there’s no such thing as no! It’s only a matter
of when.
• But you do have to agree:
– Is it a priority?
– Is it fair?
I may be sneaky but in truth, this is actually a class on budgeting and householdcommunication…See, most people view budgets and family members as obstacles standing in the way of reaching our goals. But what if instead, your budget and family were the keys to reaching financial goals? Is such a thing possible? Let’s find out.
The first two habits are the backbone to reaching financial goals.First, because guilt-free money can be spent those relatively small indulgences. If your family is not allowed to indulge occasionally on small things, they will inevitably indulge on big things.Image: Kettle boiling
A financial accountability partner, is a person you check in with before you make big purchases. For many of us this might be $20-$30. Anything above that amount needs to be run by your AP, not necessarilyfor permission, but for feedback. Anything below this amount does not need to be shared. The purpose of an accountability partner is to help you understand the pros and cons of expensive purchases before you buy.
An accountability partner could be a spouse, and parent, even a trusted friend.Most important this person should be trustworthy, and have your best interest in mind. **Sometimes a spouse shouldn’t be your AP.
Who would make the best financial accountability partner for you?Choose a dollar amount for purchases that will require a check-in with your accountability partner?
Ask first, and have each spouse write the answer down:They’ll say something along the lines of paying bills, and other responsible choices. Some may be brave and say that they would spend it on something fun. Ask again, but this time change the parameters.-You have no monthly debt payments, no car payment. No student loan payment, no credit card payments, no payday loans, no mortgage payments. Nothing. Also you have 6 months worth of expenses saved up, you have adequate insurance, you already save 10% of everything you make for your retirement.You already have a plan for your kid’s financial support as young adults, but more importantly they are on their way to being financially successful with or without your help, because you’ve already taught them the ins and outs of how money works. What would you do? Write a few of these ideas down.
List of written goalsThere is a saying that a goal is just a dream until you write it down.There is no limit to the number of goals or the kind of goals you may want to write downEven if it’s not a financial goal, it may still require some financial planning to make it happen
Your list of goals may include hundreds of items if you want it to. For now, just think of five things you would like to purchase or do in the next year.Now prioritize these goals from most important to least important.
One of the challenges with sharing a budget is to allow everyone an equal opportunity to have their goals met. Decide how to fairly support each other in reaching your respective goals.Larry Burkett, noted financial author, says, "Money is either the best or the worst area of communication in our marriages." Dave Ramsey, author, talk show host, and financial counselor said, “I know that money and money fights are the number-one cause of divorce, not to mention the thing we fight about the most.”
Is your list different from your spouses list?Is it any wonder we fight about money?Different personalities, going different directions. WE ARE DIFFERENT!Is it possible to communicate and compromise? “I’ll help us save up for some furniture, if you’ll help us save up for a boat.”Goals are a reflection of our values and beliefs, interests , tendencies and personalities.1998 study of MONEY 2000 participantsAsked respondents “What challenges you the most in making progress toward your financial goals?”Children/family listed by many
Source: Everyday Money for Everyday People by Todd ChristensenBalanced: Frugal, teachable, knows how to have fun and live life to the fullest. Sees nearly all expenses as prioritized wants. Balances all household goals and expenses.Young: Mostly children, but some adults who simply don’t know what the right thing is, but can be taught.Spontaneous: Fun loving, zest for life, have trouble with controlling spending, but can be taught.Resistant: Sees little need to discuss or limit spending decisions. Becomes defensive whenever money is discussedTightwad: Hates spending money on anything “unnecessary” (which may be defined very subjectively). In some cases may be a result of other underlying issues that require professional counseling.Splurging: Beyond spontaneity and resistance…believes that s/he is entitled to buy whatever they want whenever they want. Are often beyond reason, often need to see a professional counselor to address issues (many of which may be unrelated to money).
Usually the more “nerdy” spouse will be forced to crunch the budget numbers and manage the individual list of goals. This is ok, as long as the free spirit is brought in for regular discussion and communication.
SMART goalsA SMART goal is a goal with all the details spelled out.SpecificMeasurableAgreed UponRealisticTime-boundHow many of us have wanted something nice and expensive, then found something of lesser quality on sale, etc. and bought it only to find that you still wish for the original item.Speakers
SMART goal exampleLets say we want to buy a bicycle. If we left the goal that general the next time we see a bicycle on sale we may buy it, even though it’s not the kind of bicycle we really wanted.But, if we make this bicycle goal SMART then we won’t be tempted to waste money on a purchase that will leave us filling unfulfilled.
Let’s make this goal a SMART goalSpecific: Diamondback 2013 Overdrive V with 29-inch wheels.Measurable: $399.99 on amazon.com with free shipping.Agreed Upon: Accountability partner agrees that this is a priority.Realistic: This price is realistic for my budget, and suits my needs.Time-based: If I save up $100 a month I can purchase this bike in four months.
Needs vs Wants/LeaksNeeds are necessary to liveWithout them we may jeopardize our health, safety or well being. Wants are the things that make our lives more comfortable and more enjoyable.Wants are limitless. Before making a purchase ask yourself:Do I need it?Is it a priority?
