Debt consolidation

Set Financial Goals

Before you create a spending plan, you should have financial goals in mind. Here are some steps to help you set financial goals:

1. 1.     Identify and write down your financial goals to keep you accountable and focused on your goals.

Make sure your financial goals are SMART:

• Specific
• Measurable
• Attainable or Achievable
• Relevant
• Time-bound or time-based

Example: Shanise wants to buy a house (Note: you can replace house with townhouse or condo if more applicable.) within five years. She would like to save $15,000 for the down payment and closing costs. If she can save $3,000 each year, or $250 each month, she can reach her goal.

Her goal is specific, measurable, and time bound. We assume it is relevant to a need or desire she has. However, if she has experienced a financial setback, her overall goal and her yearly and monthly goals may not be attainable within the timeframes she has set. We will come back to this example in a minute.

1. 2.     Organize your financial goals by timeframes (e.g., you may have an immediate goal to develop a spending plan and future goals to pay off credit card debt or save for a home, a car, a vacation, your children’s college education, or retirement).

1. 3.     Evaluate your progress. To make your SMART goals SMARTER, you must Evaluate and Reevaluate your goals regularly. At a minimum, consider evaluating your goals semi-annually. If you are not making satisfactory progress toward reaching a particular goal, reevaluate your approach and make changes as necessary.

Example: Shanise currently has more expenses than income and cannot save $250 a month. How might she adjust her goals?

Answer: She may choose to extend her savings timeframe to six or seven years, or change her monthly and year goals (e.g., reduce her monthly/yearly savings amount the first year or two and increase the amounts after her financial situation has improved). She might also talk with a HUD-approved financial counselor to see if she qualifies for any homebuyer assistance programs to reduce the amount she needs to save.