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Connecting banking knowledge to personal goals and creating a simple plan for the future.
If someone gave you $100 today, would it be gone by tomorrow, or would it be the start of a secret fund for your first car or a college trip?
To reach a big financial goal, you need more than just a wish; you need a SMART plan. This acronym stands for Specific (what exactly do you want?), Measurable (how much does it cost?), Achievable (is it possible with your current income?), Relevant (does it truly matter to you?), and Time-bound (when do you want to reach it?). Instead of saying 'I want to save money,' a SMART goal sounds like: 'I will save $50 for a new video game by doing extra chores for 10 weeks.'
Let's turn a wish into a SMART goal: 1. Specific: A blue mountain bike. 2. Measurable: It costs 10 a week in allowance. 4. Relevant: I need it to ride to school with friends. 5. Time-bound: I want it in 12 weeks.
Calculation: .
Quick Check
In the SMART acronym, what does the 'T' stand for and why is it important?
Answer
The 'T' stands for Time-bound. It is important because it sets a deadline, which helps you stay motivated and track your progress.
While a piggy bank is great for loose change, a bank account is a tool for the future. Banks provide security, meaning your money is safe from fire, theft, or the temptation to spend it. More importantly, many accounts pay interest. This is a small amount of money the bank pays you just for keeping your money in an account. Over time, interest helps your money grow faster than it would under your mattress.
Imagine you put 1\%200 2. Interest Calculation: 3. New Balance after 1 year: $202
You earned $2 just by letting your money sit safely in the bank!
Quick Check
What are two main benefits of using a bank instead of keeping cash at home?
Answer
Security (keeping money safe) and earning interest (making your money grow).
Financial literacy is a 'muscle' you have to exercise. To keep learning, you can use online resources like the MyMoney.gov website or educational apps. You can also visit a local bank and ask a teller for a brochure about student savings accounts. The more you know about how money works, the more 'financial freedom' you will have as you get older. This means having the ability to make choices about your life because you have planned ahead.
Which of these is a SMART goal?
If you have 2\%$ annual interest, how much interest do you earn in one year?
Interest is money you must pay the bank for holding your savings.
Review Tomorrow
Tomorrow morning, try to list all five parts of the SMART acronym without looking at this guide.
Practice Activity
Write down one thing you want to buy this year and create a SMART goal for it using the formula: 'I will save [Amount] for [Item] by [Date] by [Action].'