FINANCIAL

PLANNING
AND GOAL
SETTING
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 TABLE OF CONTENTS
The Power Of Planning . . . . . . . . . . . . . . . . . 02

Step 1: Identify Your Financial Goals. . . . . . . 04

Step 2: Calculate Your Net Worth . . . . . . . . . 07

Step 3: Create Your Budget. . . . . . . . . . . . . . 10

Step 4: Protect Against the Unexpected . . . . 13

Step 5: Commit To Your Goals. . . . . . . . . . . . 16

Step 6: Update Your Plan. . . . . . . . . . . . . . . . 20

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 THE POWER OF WISHES VS. GOALS

PLANNING If a genie granted you a wish to travel anywhere

in the world, where would you go? What would
you do? Imagine the incredible time spent making
memories to last a lifetime.

Whether it’s a dream vacation, a new car, or retiring early,

everyone has a wish. But wishes aren’t enough. You need
more; you need the power of planning to turn your wishes
into goals you can actually achieve.

This book provides six steps, with helpful worksheets,

to help you identify your goals and establish a financial
plan for a secure future. A strong plan can make wishes
become reality.

Wishes become goals through

the power of planning.
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Financial planning does take some work but it
doesn’t have to be overwhelming. Take it one step STEP ONE :
at a time.
1 IDENTIFY YOUR
And don’t worry about waiting until the “right” time. Start FINANCIAL GOALS
now. Even if you can’t do everything you want or can’t reach
all of your goals, you won’t achieve anything if you don’t
start. Take control by beginning to map out your financial
plan. Then, revisit it on a regular basis. STEP TWO :
Financial worries aren’t necessarily caused by a lack of 2 CALCULATE YOUR
money, but from a lack of planning. Solid financial planning NET WORTH
can help take the uncertainty out of your financial future and
provide a process that allows for “course correction”
as circumstances change.
STEP THREE :
3 CREATE YOUR
BUDGET

The “perfect” time to

start planning will likely STEP FOUR :
never come. There’s no 4 PROTECT AGAINST
THE UNEXPECTED
better time than now to
get started.
STEP FIVE :
5 COMMIT TO
YOUR GOALS

STEP SIX :
6 UPDATE YOUR
PLAN

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 STEP 1:
Thoughtfully write down the financial goals you

would like to achieve. Some goals may be short-

IDENTIFY YOUR term and others might be 30 years from now.

Whether you have goals of leisure, purchasing

FINANCIAL GOALS property, philanthropy, or early retirement, the idea

is to brainstorm.

Knowing your goals will give you the motivation

to save and manage your money better. When

your financial plan includes specific savings and

investment goals, you have something to work

toward - and this helps you to keep focused.

PRIORITIZE YOUR GOALS

Once your list is complete, it’s time to prioritize. Which

goals should come first? Foundational goals like building
emergency funds and protecting against unplanned events
should take priority. Another important goal to consider is
saving for retirement since it requires accumulating a large
amount of money.

The sooner you get started the better. If there’s not enough
money to go around, goals such as funding for children’s
education, vacations, and more expensive vehicles may
need to take on less importance.

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GOAL EXAMPLES SET S.M.A.R.T. GOALS

SHORT-TERM Another way to think about your goals is to

»» Establish a budget. use the acronym SMART:

»» Make a plan to eliminate debt.

SPECIFIC
»» Begin creating an emergency fund — targeting 3-6 Be very specific in terms of what you would like
months of basic living expenses. to accomplish.

»» Purchase appropriate insurance coverage.

»» Start building credit.

MEASURABLE
Define your goals in a manner that allows you to track
»» Make a smart vehicle purchase. your progress and know when you’ve succeeded.

»» Prepare and execute a will, powers of attorney and

letter of instruction. ATTAINABLE
Set goals that are attainable, not merely dreams.
INTERMEDIATE-TERM
»» Buy a home.
RELEVANT
»» Plan for a wedding. Your goals need to be relevant and important to help
you stay engaged.
»» Prepare for the birth or adoption of a child.

»» Provide for your advanced education. TIME-BOUND

Set a target date of accomplishment.
LONG-TERM
»» Save enough to make work optional.

»» Provide for your children’s college education.

»» Start a business.

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 QUANTIFY IDENTIFY HOW MUCH TIME AND MONEY YOU WILL NEED
TO REACH EACH GOAL.
YOUR GOALS

GOALS Short Term Long Term

(what)
TIME MONEY WHY TIME MONEY WHY
(WHEN ) (NEEDED) IMPORTANT (WHEN ) (NEEDED) IMPORTANT

New vehicle 2 years $10,000

down payment

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STEP 2:
CALCULATE YOUR
NET WORTH

In the race to achieving financial success,

calculating your net worth is a good way to
establish a starting line. Complete the “Personal
Financial Statement” worksheet on the next two
pages to see where you stand.

STEP 1: ADD UP THE VALUE OF YOUR ASSETS.

Think about what you own - your home, car, electronics,
investments, jewelry, etc. Be sure to use fair market values.
For example, your house is an asset and should be valued
as if you sold it today.

STEP 2: ADD UP ALL OF YOUR LIABILITIES.

Consider who you owe - loans, mortgages, credit cards,
and student loans.

STEP 3: CALCULATE YOUR NET WORTH.

Subtract your total liabilities from your total assets to
determine your net worth.

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 PERSONAL FINANCIAL STATEMENT

ASSETS $ VALUE

Bank Accounts & Cash Equivalents

Cash

Checking accounts

Saving accounts

Money market accounts

Certificates of deposit (CDs)

Cash value of life insurance policies

[A]
SUBTOTAL $

Retirement & Investment Accounts

Thrift Savings Plan (TSP)

IRAs

Other employer-provided retirement plans like 401(k)s

Stocks/Bonds/Mutual Funds

[B]
SUBTOTAL $

Property

Your home

Vehicles

Rental property

Personal Property (Ex. Electronics, Jewelry, Collectibles)

Other

SUBTOTAL
[C] $

TOTAL ASSETS [A+B+C] $

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PERSONAL FINANCIAL STATEMENT

LIABILITIES $ OWED

Mortgages

Personal loans

Vehicle loans

Credit cards

Education loans

Other

TOTAL LIABILITIES $

CALCULATING NET WORTH

Total Assets $

Less “Total Liabilities” - $

NET WORTH =$

If you have a positive net If you have a negative net

worth, keep up the good work! worth, don’t be discouraged.
The goal is to grow your net You can turn things around
worth over time. with discipline and time.

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 STEP 3:
By now, you know where you’re starting (your net
worth) and where you’re heading (your goals).

CREATE YOUR
The next step is to figure how you’re going to get
there by creating a budget. A budget will help you

BUDGET
understand how to allocate the money you have
coming in every month.

Some categories like loan payments and rent will

be easy to identify. Others, like entertainment,
might be harder to account for, but you need to
be mindful of where all your money goes. And
don’t forget, you’ll need to set aside money for
your goals.

Challenge yourself to save and invest at least

10-15% of your gross income. Generally the best
way to do this is by paying yourself first. Set up
an automatic withdrawal or allotment that takes
money directly from your paycheck and sends it to
a savings or investment account.

GETTING STARTED

The “Budgeting Worksheet” on the next two pages is

a tool to help you estimate your current monthly inflows
and outflows.

You’ll probably want to have your bank and credit card

account statements handy for quick reference. Recording
your expenses and analyzing your spending habits is a good
practice. It can help you identify where to make adjustments
so you spend less than you earn and bring you closer
towards accomplishing your financial goals.

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10
 MONTH

BUDGETING WORKSHEET
INFLOWS YOU SPOUSE
Basic pay $ $
Special pay (hazardous duty, flight pay, etc.)
Housing allowance
Subsistence allowance
Total Monthly Gross Income [A] =$ =$
DEDUCTIONS
Federal, State, and FICA Tax Withholding (if applicable) $ $
Other deductions (employer-provided retirement plan contributions, etc.)
Total Deductions [B] =$ =$
OTHER INFLOWS (interest, gifts, refunds, etc.) [C] =$ =$
TOTAL MONTHLY NET INFLOWS [A-B+C] =$ =$
OUTFLOWS PLANNED ACTUAL
SAVINGS/INVESTMENTS (target at least 10%-15% of monthly gross income)
Emergency fund $ $
Retirement accounts ( IRA, Roth IRA etc.)
Other
DEBT
Credit cards $ $
Loans (other than mortgage and autos)
HOME
Food $ $
Rent/Mortgage payment (include property tax)
Utilities, cable, satellite, internet, etc.
Home maintenance
Furniture
Phone/Mobile phone
Property insurance (renters, homeowners)
CHARITABLE GIVING
Place of worship $ $
Other

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 OUTFLOWS continued PLANNED ACTUAL
INSURANCE
Health $ $
Disability
Life (SGLI, spouse’s group plan, personally owned, etc.)
Long-term care
EDUCATION
Tuition $ $
Room/Board/Travel
Books/School supplies/Uniforms
TRANSPORTATION
Vehicle payment $ $
Auto insurance
Gasoline/Parking/Tolls/Public transportation
Vehicle maintenance
Other (Registration/License fees, 1/12 of total annual expense)
PERSONAL
Clothing $ $
Laundry/Dry cleaning
Grooming (hair care, toiletries, etc.)
Child care (baby sitters, child care center)
RECREATION/ENTERTAINMENT
Vacations (1/12 of total annual expense) $ $
Entertainment/Dining out
Hobbies (for example, golf or tennis equipment and fees)
Club fees/Organization dues
Other
TOTAL MONTHLY OUTFLOWS =$ = $

CALCULATE MONTHLY CASH FLOW PLANNED ACTUAL

Total Monthly Net Inflows $ $
Less Total Monthly Outflows - $ - $
Net Cash Flow (Deficit) =$ = $

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STEP 4:
PROTECT AGAINST THE UNEXPECTED

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 A sturdy house is built on a strong foundation. The
same can be said for the dependability of a strong
financial plan.

Now that you have identified your financial goals,

calculated your net worth and determined your
budget, the next step in developing your financial
plan is to protect against the unexpected.

This step begins with a review of emergency funds

and insurance coverages. These foundational
pieces help to protect you when unplanned events
threaten to keep you from meeting your goals.

EMERGENCY FUNDS

An emergency fund can offset events like car repairs,

emergency trips home, or even repairing or replacing your
smart phone.

In most cases you should set aside a fund to cover a least

three to six months of basic living expenses. Because you
never know when you’ll need it, this money should be kept
in a safe and easily accessible account.

If you don’t already have an adequate emergency fund,

consider making it a priority on your list of financial goals.

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INSURANCE

Even an emergency fund cannot prepare you for

catastrophic loss or illness. Insurance is often
the better answer. The most common types of
insurance include:

»» Auto

»» Property (renters, homeowners)

»» Health

»» Life

»» Disability

It is important to review your current coverages at least

annually to determine if you have adequate protection.

Health and disability insurance are provided to Active Duty

personnel as part of the benefits of service. Life insurance
is also available to service members and their families
however, some situations will dictate purchasing additional
personal coverage.

Auto and property insurance must be purchased in the

private sector and can vary greatly in terms of coverage
and cost. It’s important to discuss your specific situation
with your insurance company or agent to make sure your
coverage is adequate for your needs.

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 STEP 5:
Once you have secured your financial foundation

with an emergency fund and the protection of

COMMIT TO adequate insurance, you are ready to save and

invest towards your financial goals. Let’s take a

YOUR GOALS closer look at identifying the gaps between your

financial goals and available resources.

TIME TO SAVE!

Start saving and investing early and regularly to reach your

financial goals. The key is to get started and keep it going,
even if the amount you can initially save isn’t as much as
you need for all of your goals.

Increase your contributions when you can. For example,

when you receive pay and longevity increases, promotions,
federal income tax refunds, gift money and rebates,
consider putting some or all of this additional money toward
your goals.

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 GUIDELINES FOR THE “SAVINGS
GOALS WORKSHEET” ON THE
NEXT PAGE:

GOALS
Copy the goals you listed on the “Financial Goals Worksheet” in Step 1.

TARGET DATES
Record the target dates of your goals.

AMOUNT NEEDED
Estimate the amount needed for each goal using today’s dollars.
For long term goals such as retirement, consider using a retirement
calculator to estimate goal amounts and monthly investments. For
shorter term goals, simply enter the dollar amount needed. For example,
In two years your goal is to make a 5% down payment for a house
valued at $200,000. You would enter $10,000 under “Amount Needed”.

CURRENT ASSETS
Identify any assets on your “Personal Financial Statement” from Step 2
that you are willing to commit to your goals. Then, indicate how much
you would like to allocate to each. For example, if you have $4,000 in
a savings account and decide to allocate half of it to the down payment
goal, write $2,000 under “Current Assets”.

Knowing how much GAP

Indicate the gap between the cost of each goal and the assets you have
you need to save allocated to it.

each month is NUMBER OF MONTHS TO TARGET DATE

Enter the number of months between now and your target date.
critical to achieving
AMOUNT TO BE SAVED EACH MONTH
your goals. Divide the gap amount by the number of months to the target date.
The result will be what you need to save each month to reach your goal.

TOTAL
Add all the amounts to get you an estimate of how much you need to be
setting aside each month to reach all of your goals.

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 SAVINGS GOALS WORKSHEET

NUMBER OF AMOUNT TO
GOALS TARGET
DATES
AMOUNT
NEEDED
CURRENT
ASSETS
GAP MONTHS TO BE SAVED
TARGET DATE EACH MONTH

Down payment October

$10,000 $2,000 $8,000 25 $160
on home 2018

TOTAL =

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 ADJUST YOUR PLAN

If the amount you are now saving falls short of the

amount you need to save to reach your goals, try
asking yourself these questions:

»» Are you paying yourself first with a disciplined saving and

investment program in which you’re setting aside at least
10 to 15 percent of your gross pay?

»» Could you increase the amount you are setting aside?

»» Could you earn more and spend less?

»» Are you spending too much on impulse purchases and

neglecting long-term savings and investment goals?

»» Are your goals too ambitious?

»» Could you eliminate any of your goals?

»» Could you delay any target dates of your goals?

»» What is the impact on you and your family if your goals are
not accomplished?

FIND THE GAPS It’s important to repeat this exercise at least annually and
adjust as appropriate. If your income increases — for
example, if you receive a pay raise, unexpected bonuses, or
Now look back at the “Budgeting Worksheet” from find other ways to accelerate your savings — then you will
Step 3. Does your budget allow for enough savings be able to accelerate your progress toward your goals. Be
to meet your goals? If not, what adjustments can prepared to modify your goals if you suffer a setback. The key
you make to your monthly budget? Or do you need is to remain flexible.
to revisit your goals?

Keep in mind this worksheet is designed to give you an

estimate of what you need to set aside. In many cases,
use of on-line calculators may be necessary to get a more
accurate picture. Investment returns, inflation, and life
events will also have an impact on your success.

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 STEP 6: As you kick off a new year,
January is usually a good time
UPDATE YOUR PLAN to do an annual review, but
pick whatever schedule works
for you.

Your financial plan, just like your real-world

financial situation, is subject to change. Make it
a point to review your finances annually and at
significant life events such as:

»» Marriage

»» Divorce

»» Birth or adoption of a child

»» Job change, promotion, or loss

»» Home purchase

»» Move, PCS, or relocation

»» Death of spouse or heir

»» Retirement or separation from the military

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CONSIDER PROFESSIONAL
ASSISTANCE

Many things can interfere with your ability to initiate a

solid financial plan — and for many people, choosing
the right investment plan is pretty intimidating. You
may want to consider working with a CERTIFIED
FINANCIAL PLANNER™ (CFP®) practitioner if:

»» You want to improve your overall financial situation,

but do not know where to start.

»» You would like a professional to evaluate your

existing financial plan.

»» You need financial advice on investment, risk management,

or estate planning strategies.

»» You have experienced a significant life event.

»» You do not have time to build your own financial plan.

»» You need help balancing multiple goals and limited financial

resources, such as: college planning vs. retirement planning.

SELECTING THE RIGHT FINANCIAL PLANNER

DON’T BE AFRAID TO ASK QUESTIONS:
»» Ask people you respect for a referral to their trusted financial FACE THE FUTURE
planning professional.
WITH CONFIDENCE
»» Ask about the financial planner’s background and
work experience.

»» Ask the planner as many questions as you need to Financial uncertainty can cause worry and stress.
understand and feel in control of your financial future. Using these six steps to understand your financial
A true professional will encourage questions and show situation and plan your financial future may seem
interest in tailoring a plan to meet your needs. intimidating at first, but ultimately, it can lead to true
peace of mind.

You may not be any richer, but knowing where your finances
Certified Financial Planner Board of Standards, Inc., owns the
stand right now, where you would like to be, and what
certification marks CFP® and CERTIFIED FINANCIAL PLANNER™
resources you have to make that possible, will help you face
in the U.S. which it awards to individuals who successfully
complete CFP Board’s initial and ongoing certification requirements. the future with confidence.

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 NOTATIONS

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NOTATIONS

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ACCESS MORE FREE EDUCATIONAL
MATERIALS TODAY

Financial Planning and Goal Setting

Building Your Savings
Understanding Credit
Managing Debt
Buying or Renting a Home
Buying a Vehicle
Basic Investing
Planning for Retirement
Individual Retirement Accounts (IRAs)
Financing College
This publication is not intended to be or provide financial, tax, investment or legal advice. It is only
a general overview of the subject presented and is solely for your information. Personal Finance
for Military Life does not provide professional services for financial, accounting or legal matters.
Applicable laws are complex, the penalties for non-compliance may be severe, and the applicable
law of your state may differ. Consult your tax and legal advisers regarding your specific situation.

Personal Finance For Military Life 2019. All rights reserved.

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