[Music] welcome to personal finance I'm Mr Wallenberg personal finance instructor at Missouri State University if you're watching this you're probably enrolled in a dual credit course personal finance through your high school and through Missouri State University in order to get credit at Missouri State University for this personal finance class you'll need to meet the Missouri personal finance competencies through your high school and then meet the requirements that we've laid out at Missouri State University after once you're enrolled in the class and you have your Missouri state ID you'll be able to enroll on Blackboard and view information about this course there's the lecture component that you're currently watching there will also be additional readings on blackboard for you to take a look at there will be quizzes after each segment on blackboard and there will be instructions on blackboard for you to prepare your first personal financial plan once you complete your personal financial plan you'll need to take the final exam verify the high scho we will verify the High School requirements being met and then you'll receive college credit for personal finance the topics we're going to cover over this course our goal setting budgeting Credit Insurance and we'll discuss some investment Basics so let's get started on goal setting the things we're going to talk about on goal setting deal with understanding how goals are used we're going to set goals we're going to identify some financial goals and then we're going to discuss those financial goals okay we're going to talk about goals the topics we're talking about this segment we're going to understand how goals are used we're going to talk about setting goals we're going to identify some financial goals then we're going to discuss financial goals so let's talk about how understanding how goals are used we all set goals if we understand what we want we can Define the goal and the goal will help us achieve what we want and it will help us validate that we're getting where we want it to go what is a goal a goal gives us something to strive for it holds us accountable and helps us realize once we've achieved that goal we have long-term goals intermediate goals and short-term goals hopefully the short-term goals support the long-term goals for example in 5 years I want to have a $10,000 emergency fund if we want to set an intermediate goal or a short-term goal to support that in one year I might need a th000 $1,000 the $1,000 gives us an intermediate objetive Ive and that way we know if we're on track intermediate goals can also be used as a status check when we're looking at short-term goals we're looking at anything within one year intermediate goals are 1 to 5 years and the long-term goals are anything longer than 5 years are financial goals any different than any other goal well when we talk about financial goals we're talking about using set dollar amounts and timelines to to achieve our financial goals financial goals involve our personal finances there could also be personal goals something you want to accomplish in your personal life a vacation you want to take at a certain point in time you get have professional goals a certain level in your career that you want to obtain or reach to so we need to start setting some goals Now understand what a goal is and how we can use them one way we one of the techniques to look at goals is to call it a smart goal goals need to be specific you need to establish exactly what it is that you want out of your goal part of specific is to make it measurable your goal needs to be measurable if you can measure it then you know when you've achieved that goal the goal needs to be attainable if I if I set a goal to save a million dollars in one year and I only make $30,000 a year that's not an attainable goal we need to make sure it's attainable it needs to be realistic if it's not realistic you're going to be frustrated because you're never quite reaching your goal and the last thing that makes a goal effective is the time element when do you want to achieve that goal let's take a look at some goals I want to buy a car is that a smart goal let's think about would you be satisfied with a 1999 Subaru hatchback you bought a car when will you buy the car if you wait 5 years to get that Subaru now it's even five years older are you going to be satisfied that you achieved your goal probably not so we need to add a little bit to this goal how about if I save $2,500 use as a down payment on a new Chevrolet Malibu 3 years from today is that specific pretty much is it measurable well I'll know when I reach $2500 I'll know when three years from today is is it attainable based on my situation I think I can save $2,500 in three years realistic definitely do I have a time element 3 years from today so three years from today if I have my down payment and I'm on the at the car dealer looking for a Chevrolet Malibu I'll know that I achieved my goal let's take a look at a personal goal I want to lose 10 PBS losing 10 lbs sound like a good goal well yeah I want to lose weight very specific is that measurable I can step on a scale and I'll know if I lost 10 PBS or not is it attainable that depends on your current weight if you're a large person losing 10 lbs might not be a big deal if you're a very small person that may not be attainable because losing 10 PBS would be a significant amount of your weight so it may or may not be attainable is it realistic it depends on your current situation are you in the middle of a trip where you're not eating well are you not feeling well it may not be realistic to do it right now what about the time element if I lose those 10 pounds and it takes 10 years well I have achieved my goal I need to make it more specific I want to lose 10 lbs within the next 6 weeks how about saving a million dollars that sounds pretty good for all of us doesn't it when do you need the million dollars by I think you see where I'm going it's got to be specific and you've got to make sure it's attainable and realistic for most of us it's not realistic to save a million dollars in the next three or four years now if we set a timeline of 45 years that may become realistic we probably need to set up some intermediate goals to go along with this goal if I look if I use my financial calculator and just look at the the numbers if I save $500 a month earning 5% interest for the next 45 years I'll have my million dollars but what if I can't save $500 this month my budget doesn't allow me to save $500 maybe I can't save that for a few years so maybe I would like to start with $100 a month at 5% for two years there's a short-term goal my intermediate goal is to add to that in in years 3 through eight let's save $300 a month if we were to do that we'd be we'd be a start we'd be at about $23,000 still nowhere near our million but we've got a start now by adjusting my goal or by adjusting the the process to reach that goal saving Less in those first few years I'm going to have to pick it up a little bit so after those eight years if I were to save $600 a month I would be able to achieve my million dollars within the next $45 years now I talked about financial goals versus personal goals this is personal fin let's talk about some of our financial goals these are goals that should be in your financial plan you need to decide what it is that you want to achieve regarding your personal finances let's look at saving we can all set a saving goal savings goal to make it specific I want to save $4,000 in my emergency savings within the next 12 months well let's break that down just a little bit while we're in the process of setting this smart goal $4,000 is not just a random number that might work for some of you and might not work for others you need to decide how to come up with that number and have a realistic timeline in order to get there your emergency savings might be a couple months of living expenses should something happen you should include the deductibles on your insurance because you that money needs to come from somewhere so as we're building up that savings once you reach that goal that goal is accomplished and you can put use the money that you were putting towards that goal for something else housing is a common goal for people the goal I hear so often is I want to own my home well think about it remember remember the smart goal specific measurable attainable realistic time sensitive owning your home doesn't meet very many of those but to make it specific in 10 years I want to say $15,000 to use as a down payment on a three-bedroom $150,000 house in Southwest Missouri now do I know what I'm looking for and what what I'm saving for I think so hopefully I've done the research I know what a $150,000 house in Southwest Missouri is going to look like hopefully if I've done that research I know that I can get a three-bedroom house for $150,000 now as you go through your budget you can adjust the numbers what's it going to take to save $15,000 in 10 years maybe you can save faster maybe you can save more money but as you as you get closer to your goal you can make those adjustments an insurance goal do we need insurance goals insurance is a key element of your personal financial plan most of us have homeowners or renters Insurance most of us have automobile insurance health insurance most of these Insurance programs have a deductible or a co-pay something you need to pay when you use the insurance if you have a deductible on your car insurance you've got to have that money somewhere remember I mentioned your deductibles in your emergency savings well maybe we want to raise our deductible so that we can can lower the cost of our insurance how about setting a goal here to save an extra $11,000 in 12 months so I can raise my deductible maybe we already have our emergency Savings in place now I'm going to try and save another ,000 to put into that emergency savings plan so I can raise my deductible from $250 to $1,000 and save each month on my monthly insurance premium but before I do that I got to make sure I have that money so when I do have that accident I'm able to cover my my share of the insurance retirement is a goal Everyone likes to talk about everyone looks forward to retirement everyone has great dreams for retirement but you need to set your retirement goals how do you know what you want in retirement do we just throw a dollar amount out there I mentioned earlier I want to save a million dollars for retirement how far does a million dollars go is a million dollars enough is a million dollars way too much one of the things we can do with our retirement goal F we need a time we need it measurable so at age 60 I want a monthly income of $5,000 another element that I might want to add to that in terms of time is how long do I want $5,000 a month for one year or do I want $5,000 a month for 10 years or 20 years I need to decide that then I can get into my financial plan decide how much I need to save for that lump sum in the particular scenario I was just talking about if I want $5,000 a month to last me 20 years I would need about $645,000 so if I've got 50 years from now until I retire I would need to save about $118 a month now most of us don't have that long at least not if we're going to retire at age 60 you may want to push your retirement age back you may want to lower your amount or that you're going to withdraw or you can increase the amount you're investing each month the other thing you need to do with your goals the last thing is Monitor them if I look at my retirement goal I want to have a monthly income of $5,000 today I think I can live on on $5,000 30 or 40 years from now $5,000 will not go nearly as far as it does today so I may need to make adjustments to my goals on the housing goal in 10 years I want to buy $150,000 house that same house may cost more as the price of my goal increases I'm I will need to make adjustments to the steps that I'm taking to achieve my goal and that's where those intermediate goals become even more important so we've talked about how goals are used we've set several goals these goals could be used for yourself for your financial plan or you could adjust them some of you have totally different goals and we've we've looked specifically at several Financial goals okay we've talked about how goals are used and we've set some goals the financial goals we discussed are goals that you can use in your personal financial plan when you're setting your goals make sure you use smart goals make them specific measurable attainable realistic and time sensitive as you apply those goals to your financial plan you'll be on the road to being financially [Music] successful