When my daughter was in elementary school, I got her a Moon jar – a foldable bank with three compartments labeled “Share, Spend, Save.” Moon jars were created to help kids learn about money and goal setting. I encouraged my daughter to sort her money – allowance, earnings from chores, and gifts – into three categories and make a plan for how to use it. The Spend slot is for short-term wants, Save is for longer-term goals, and the money put into Share is for helping others. It’s a simplistic form of a financial plan. A way for young kids to connect goals with the means to make them a reality.

I started giving my daughter a small allowance when she was old enough to do simple arithmetic. When we went to the toy store, she had to make decisions whether she wanted to spend her money right away or save it for something bigger. She learned early on that money isn’t everything, but it could help her get the things she wanted.

Of course, as we get older, money gets a lot more complex. We have to balance earnings, savings, and investments with expenses, needs, wishes, and yes, taxes. We must plan for today and the future. But these are all very personal decisions. And that’s where goal setting comes in.

A better way to achieve your goals

As adults we have goals that are both practical and aspirational. Some people talk about their goals or write them down. Others keep them to themselves. Personal goals can range from improving health and happiness to retiring early or switching careers. Not every goal has a financial component, but for those that do, the money part needs to be addressed.

Setting and working toward goals can also be a great way for couples and families to communicate. Shared goals help prioritize how families will spend their precious resources – whether that’s money or time. Goal setting takes hopes and dreams and turns them into a plan.

It turns out that setting specific goals makes it more likely they’ll be achieved. Whether you’re setting goals as an individual or a family, the more tangible your plan, the more likely you are to see your goals become reality.

SMART goal setting

A useful framework for creating goals is to follow the SMART model. SMART is an acronym that stands for Specific, Measurable, Aggressive, Realistic, and Time-bound. A specific goal has details. For example, rather than saying you’d like to go on more family vacations, you could set a goal to budget enough for out-of-state travel once a year. The only way to know if you’ve achieved your goal is to make it measurable. If it’s a financial goal, you should be able to define how much you plan to share, spend, or save.

The third letter in the SMART acronym is aggressive. Aggressive doesn’t mean un-achievable. But there’s really no sense in goal-setting if it’s something that would happen anyway. Goals also need to be realistic. Your financial goal might take some discipline and perseverance, but it shouldn’t rely on winning the lottery.

And finally, your goals should be time-bound. Deciding when you want to achieve each of your goals gives structure to your plan. By defining goals that are specific, measurable, achievable, realistic, and time-bound, you’ve got a roadmap for where you want to go and how you’ll know when you get there.

Don’t be afraid of change

Goal setting isn’t just about planning for big things like a house, college, or retirement. It should take into account more immediate things too, like supporting a hobby or family interest. In fact, your big-picture plan includes all these things, so you know where to focus your energy and resources.

My daughter is now a college student, and I haven’t stopped giving her advice. Lately everyone is asking what she wants to do when she graduates. She has aspirations but I’ve suggested she should also be open to changing her plans. After all, sometimes a new opportunity comes along, or there may be an unanticipated twist in the road.

Having a personal financial plan helps you focus on your goals so they’re more likely to become reality. And having a relationship with your financial planner means you can keep evaluating your plan to make sure you’re on track to meeting your goals.

Questions to ask yourself:

• Is there anything standing in the way of your goal setting?
• Are your goals SMART? Are they specific, measurable, aggressive, realistic, and time-bound?
• Do you discuss goals with your spouse, partner, or family and listen to their goals?

Action Steps:

• If you’re going to set goals as a family, consider first writing down a list of family values. You might even create a family mission statement.
• Even if your goals aren’t fully articulated, be sure to discuss them with your financial planner so they can guide your personal financial plan.
• Give yourself permission to change your goals. And when you do, set a meeting to update your financial plan.

The foregoing content reflects the opinions of Liz Behlke and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.