Question

Identify three SMART financial goals (specific, measurable, achievable, relevant, and time-bound): • One short-term goal (1 year) • One medium-term goal (5 years) • One long-term goal (10 years and beyond) • You must have one goal related to a fixed expense, one related to a variable expense, and one related to a discretionary expense. Write Three Paragraphs ̈ Write a paragraph of at least 3-4 sentences for each of your three goals. • State what the goal is. • Explain the term for the goal and why it represents that time interval (short, medium, long term). • Explain which expense category that the goal represents.

Answer 1

Short-term (1 year) — Goal: Save $3,600 in 12 months to cover three months of fixed housing costs (rent/mortgage). This is specific (exact $3,600 target), measurable (track monthly deposits of $300), achievable (redirect $300/month from discretionary spending or an automatic transfer), relevant (protects you from income interruptions that would affect unavoidable fixed bills), and time-bound (one year). It’s a short-term goal because it focuses on an immediate safety buffer for fixed expenses that recur monthly and can be addressed with small, steady sacrifices over the next 12 months. This goal represents the fixed-expense category because it is expressly intended to cover unavoidable, predictable payments like rent or mortgage that do not vary month-to-month.

Medium-term (5 years) — Goal: Reduce variable expenses and build a $4,500 car/maintenance fund in 5 years by saving $75 per month from groceries, fuel, and utilities. This meets SMART criteria: specific ($4,500), measurable ($75/month contributions), achievable (identify meal-planning, fuel-efficiency, and utility-saving steps to free up $75/month), relevant (keeps you from being blindsided by major variable costs like repairs or replacement), and time-bound (60 months). It’s medium-term because it requires multiple years to accumulate enough for significant variable-cost events (major repairs or a used-car down payment) while allowing time to change spending habits. The goal targets the variable-expense category since it comes from costs that normally fluctuate month-to-month (groceries, gas, utilities) and uses those savings to smooth future variability.

Long-term (10+ years) — Goal: Over 12 years, accumulate $30,000 for an extended travel sabbatical by redirecting $210 per month of discretionary spending (dining out, subscriptions, entertainment) into a dedicated savings or investment account. This is SMART: specific ($30,000), measurable ($210/month and an annual account balance check), achievable (small monthly amounts compounded over 12 years make the target realistic), relevant (supports a meaningful long-term personal goal), and time-bound (12-year horizon). It’s a long-term goal because it requires sustained saving and potential investment growth over a decade-plus period to finance a large nonessential experience, which allows for compound growth and lifestyle planning. The goal is tied to discretionary expenses because it intentionally reduces nonessential spending choices to fund a future luxury or life-experience purchase.