The Power of Setting Goals

Setting financial goals, whether they are short-term or long-term, teaches valuable life skills. When we have something we want to accomplish, establishing a goal helps us demonstrate our commitment to achieving it. The power of setting goals includes building perseverance, self-confidence and accountability.

Short-Term vs. Long-Term Goals 

A short-term savings goal is the amount of money you plan to save for a purchase you intend to make soon, typically within two weeks to a few months. In contrast, a long-term savings goal refers to the money you aim to save for a purchase intended further in the future, which could be one year, five years, ten years or even longer. For example, putting aside spare change to buy your favorite candy at the end of the week is a short-term goal. On the other hand, planning and budgeting to buy seeds and tools for a garden represents a long-term goal.

How Do You Set Goals?

The SMART method is an effective way to set goals. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-based.

• Specific: The more specific your goal, the easier it is to plan and achieve. 
• Measurable: Measuring your progress can motivate you to keep going. 
• Achievable: Make sure that your goal is realistic and attainable. 
• Relevant: Your goal should align with your current financial priorities. 
• Time-based: Set a clear deadline to ensure you're on track.

Once you have set your SMART goal, create a plan for saving money. This can be as simple as putting aside a percentage of your weekly allowance or paycheck if you have a part-time job.

Consider asking your parent or guardian to help you keep track of how much you're saving each week and how much closer you are to reaching your goal. Perseverance and accountability are crucial in financial planning. While keeping a portion of your money may not be as enjoyable as spending it all immediately, reaching your savings goal will allow you to spend on what you have planned for. This accomplishment can also significantly boost your self-confidence.

Apply It

Discuss with your family how the power of setting goals applies to your life. What goals do you have for this year? Are they short-term or long-term goals? Regardless of how big your wants or needs are, setting a goal and creating a plan to achieve it is a decisive step forward.