Lesson 3 - Statements and Budgets - Part 12

Setting Goals

Goal Setting can be Complex in nature. There are many things to consider, luckily, we have some structure that should help us determine what Goals to create and what their level of importance is. We have another simple pyramid to help us, with broad Goals at the top and more specific ones at the bottom. Let’s look at an example of my Goals.

Here we see at the top is what most people want in the end, to obtain Financial Independence. But what do I think Financial Independence is? Well that depends on me a little, but generally we want to be able to have more stuff in the future, we want our children to have some access to a higher education and we also want to retire with our current ability to consume stuff the way we did before retirement.

On the bottom row we have our Current Consumption, or what I want now. These Goals can be very specific and can be broken down into Goals that take place over the next year or next few years. Housing will be a Goal that I will be paying for over the next 15 to 30 years, but it is something I want to spend money on now or save for a future point.

No matter what our Goals are, we have to budget for them.