F1.2 Identify different types of financial goals, including earning and saving goals, and outline some key steps in achieving them.
Skill: Setting Financial Goals
Managing finances is not just about being able to afford the expenses that are essential to health, safety and well-being; it is also a way to allow yourself to work towards financial goals, no matter what the associated value.
When discussing financial goals with students, it is important not to let one's own beliefs and biases influence the tone or direction of the discussion. Perceptions of the value of money can differ from family to family, from individual to individual, and may also have social and cultural implications, so it is important to allow students to share their truths about the financial goals they might have or imagine themselves having.
A financial goal is not necessarily the purchase of a physical object. The financial goal could be to save for an experience (a trip, an excursion, a concert, etc.), to make a donation to an organization that inspires us, or even to save a sum of money per month in order to have a safety net in case we have to face an unexpected expense.
Planning for and Reaching a Financial Goal
In teaching, it is important to establish clear learning goals and success criteria that are well understood by students. This allows the student to focus on the expectations of the task at hand. Similarly, having a clear financial goal can help us make decisions about money and ensure that spending is well thought out.
Teachers should introduce students to a variety of financial goals, which can be categorized by type of goal (an amount to be saved, a purchase, personal income), time frame (immediate, short-term, and long-term), or even the people or organizations that might be involved in achieving the goal (the individual, family, charities, community, etc.).
It may be difficult for the student to determine a financial goal, especially if they have little or no experience with money. In order to respect and value differences in students' comfort with money management, a fictional scenario is useful and preferable. A scenario that focuses on the interests of the class group could also support the collective implementation of a plan to achieve the goal.
Some examples of financial goals relevant to students are grouped in the following table.
| Financial Goal | Immediate | Short-Term | Long-Term |
|---|---|---|---|
| Individual |
Have a summer job at minimum wage, 15 hours per week. |
Save half of all the money received as gifts this year. |
Set aside $1000 a year for post-secondary plans. |
|
Classroom |
Organize an activity that will raise funds for the local food bank. |
Seek sponsors during the year to finance the publication of a yearbook. |
Plan to fund the creation and maintenance of a community garden through fundraising and grant applications. |
|
Community |
Increase the registration fee for a sports team to purchase new equipment at the beginning of the season. |
Set aside a portion of the community youth centre's dues until savings are available to pay for renovations. |
Seek sponsors in the community and organize fundraisers to take part in a humanitarian trip internationally. |
This table is not exhaustive; by presenting a version of this table with only the headings, it could be very interesting to see what examples the students will think of. An exchange of ideas could follow this exercise, which could be done individually, in pairs, or in small groups (or a combination of all three at different times in the process). The class could select a scenario to work on, or the scenarios can be posted for students to choose which one to plan.
Planning, or how to achieve the financial goal, can be done using budgets. The complexity of the budgets should be commensurate with the students' level of knowledge.
Targeting a financial goal may require some trade-offs. For example, if the goal is to save a set amount of money per month, some non-essential expenses may need to be eliminated, or an amount of free time each month may need to be devoted to an additional job. In this case, it is important to create a plan related to the financial goal in question. A plan could vary depending on the goal, but could include the following steps:
- Determine the dollar value of the goal, either the amount to be saved or the amount of the planned purchase.
- Determine the duration of the objective (immediate, short-term, long-term).
- Analyze monthly income and expenses to determine current available funds.
- Reduce some non-essential monthly expenses or establish new sources of income, if necessary.
Knowledge: Financial Goal
A financial goal i an objective that a person sets that affects how they spend and save money. Objectives can be short term, such as buying a pair of sneakers, or long term, such as attending university.
Source: The Ontario Curriculum. Mathematics, Grades 1-8 Ontario Ministry of Education, 2020.