SMART Goals in Financial Planning for the Future in 2025

Goal Setting and Financial Independence for 2025

In this episode of the Bryan Foltice Behavioral Finance Podcast, Dr. Bryan Foltice helps listeners kick off 2025 with personal finance goal setting. Discussing SMART goals, he outlines the importance of setting Specific, Measurable, Achievable, Relevant, and Time-bound objectives. Bryan shares his own journey with his wife Mandi, tackling debt and prioritizing investments, and encourages listeners to reflect on their financial progress over the past year to set impactful goals for the new year. Tune in for insights on achieving financial independence and making informed decisions with your money.

00:00 Introduction to the Podcast
00:50 Setting Personal Finance Goals for 2025
02:40 Reflecting on Past Financial Decisions
03:49 Mandi's Career and Financial Journey
06:49 Combining Finances in Marriage
11:53 Achieving Financial Milestones
13:18 SMART Goal Setting Explained
19:17 Conclusion and Final Thoughts

Transcript

0:01

Welcome to the Brian Foltis behavioral finance podcast, where we unravel the mysteries of behavioral finance and unlock the secrets to making smarter, more informed decisions with your money. Now here's your host, Dr. Brian Foltis. Welcome everybody to the Brian Foltis Behavioral Finance Podcast. If you have not done so, please make sure you subscribe so you don't miss a future episode of this podcast. Also please be sure to check out brianfoltis. com for the full mini course. I have two available on udemy. com or just go to brianfoltis. com that you can buy a The full course and get free resources on all things behavioral finance today. We are going to kick off the new year here in 2025 with a little bit of personal finance goal setting. And I've noticed that as much as we'd like to talk about goal setting and my students, they. Even know about a smart goal. We often have a tough time writing out goals that are smart, and we're going to unpack what that actually means. But we have good intentions, especially at the beginning of the year. But by the second Friday of January, those are usually gone. as much as I don't like to marry myself to January one, to change my life I do the beginning of the year as a, an inflection point to go back and review how the previous year went, take stock in that, and to use that information to help. be better or improve in 2025. So today we're going to look at this from a personal finance standpoint and previous podcasts that we recorded, we were looking at Pareto's rule 80, 20, and I spoke a lot about time management and that is definitely a big thing that I'm working on here. Moving into the new year and so today though we want to unpack some of the personal finance, milestones, and the good, bad, and ugly of it, and how we're going to use that information to shape hopefully some better 2025 goals. So I want you to start thinking about your own situation as you look back. Did you actually track your expenses? Have you tracked your net worth? So all of your assets that you hold minus any debts that you pay, how have you done from beginning of the year to the end of the year? And so I'll share a little bit about what Mandy and myself have done here in this past year. So from purpose standpoint and life purpose, we were really focusing on trying to align ourselves with what we really. want to achieve. So for me, it wasn't much of a shift because I love my job and I like what I'm doing, making an impact in college students lives and my job as a finance professor. And, but I did want to increase my impact and that meant moving the Money Strong programming forward. Increasing some of the impact around the behavioral finance. So we definitely have made some progress and will continue to do that for Mandy She was in another place where she was burnt out with her job as an OR nurse And I realized very quickly that when you are with a nurse or somebody who works in an operating room that my bad day and her bad days are not the same. And so I, I realized very quickly, if she had a bad day that meant way more to her. Then what any kind of bad day would look like for me and when she was telling me about how she was feeling burnt out around the, her job and being a water nurse and feeling trapped because you make good money and there's a lot of job security around that. I had a better understanding after now being. with her for three years than I did before. But when we were talking about what she really wanted to do she was looking for more balance where she wasn't going to be in the operating room for 40, 50 hours a week. We peeled her hours back and she was working on her art, but then we realized that this part time nursing thing can be a little bit more fickle than Then what is reported. So if they say you're going to get 20, 30 hours, it's not always the case. And so we were trying to manage that and find the balance. And it took us all year to find that where she's getting the flexibility, where she wants to take a week off. She can do it. No problem. As this PRN, so this part time registered nurse but when she wants to put in hours that she actually can get those hours started out very dry. Okay. Which meant not a ton of income in the first part of the year, and now it's balanced itself out here at the end of the year. So that was something that we had to work out just from an income standpoint, but I feel like we're in a much better position where I'm in, in a position to continue to drive income forward from my job. And summer courses that I get paid extra for, plus the consulting work that I'm doing here with behavioral finance and trying to get the podcast up and running. And at the same time, we had this kind of our set it and forget it plans with our retirement. So for me, that was maxing out the 401k, getting a 10 percent match for. The retirement contributions as well of my salary. So that was definitely a plus from our retirement standpoints. And whenever Mandy is working, we're putting 20 to 25 percent into her retirement. So that definitely dead ends the blow from a tax standpoint when that time comes each year. At the same time, when Mandy and I got married. back in 2023. This was August. And we've done a lot in the past year and some change. It doesn't, I guess it feels longer than that, but in a good way. And we at the end of 2024, so this was just about a week ago. We wrote off the last. student loan debt that she had. And so this was one of the things that when we met first thing we had to really, We were really at that point of our relationship where we needed to start airing out our dirty laundry. And for myself, that was talking to her about my my infidelity in my previous marriage. And really trying to unpack what that was and what I, why I did it and how I learned and how my takeaways of that experience. Because for her, that was a deal breaker for ever being with anybody longterm that they have never had infidelity in a previous relationship. And so we had to unpack that and it was on. We did an overnight trip. Of course I had to take her out of town. In case I dropped the bomb that I had time to talk her out of it in case she wanted to leave. But at that time. That same evening, that conversation that we had as we were getting to know each other I knew that she had debt too. And so her part of it was laying out those numbers. So what are some of the numbers? Because in my mind, I thought I'd worked my way to get out of debt, was building wealth. No way would I ever find a partner or find a a spouse that would have this and have to go through this again. She had at the time, I think she had she went to nursing school later. And so she had, I want to say about 68, 000 when we first met in student loans. And then she had her car, which I love her new Jeep grand Cherokee, but I think she owed about 20 some thousand dollars on the car when we knew each other. So it was that night where we both really had to absorb some really. Intense information and I think from that standpoint as we were really developing our relationship it was to I was keeping an eye on her to see if She was moving in the right direction or changing the behavior in and making better financial decisions and seeing how She was feeling about that and I knew that she was looking at me to see if I was wandering or doing anything like that. And so I said, no it's over. Or I said, here's the thing. You can just, if social media or my phone is an issue, here are all my passwords. Here's whatever you can just look at it, whatever you need. And so what we found out when we got married, so between the time we first met and had that awkward conversation come to the time we got married, which was August of 2023 she had eliminated her loan on her auto, which was the highest interest rate. So we tackled that first that was gone and her 68, 000 debt was down to 42, 000 by the time we got married. And so I saw the progress and we're like, all right, this is, I can see this. I'm going to break my rule and she's going to break hers. I'll break mine. It's more than fair in my opinion. Then but at the end of the day, it was still 42, 000 in student loans. So suddenly I have a new wife and now I'm back in student loan debt. And you're going to learn, you've seen previous episodes and we're going to talk about it later, combining finances when you're married or remarried. And what we've done is we've, we're married now. And so we're combining finances and access and all that stuff. But obviously now that becomes my student loan as well. And in addition to maxing out our 401k, we decided, Hey let's start devoting some of our resources now towards this These loans and without dipping into any of our current investments or anything like that, just as it comes in, let's just make it a priority to eliminate these loans. So at the end of 2024, this was just last week we paid off that last loan. So That is, feels really good. I wouldn't say that making those payments were fun because I can think of many different ways to invest that money, but to have that gone into now, any extra money can now literally just go into all the good stuff. All the investing in addition to maxing out retirement 401ks. Now The true fun. The party really starts now. And so anyway, it was still a very nice milestone to achieve to have that back out of our lives. Give me another repetition of working my way out of debt and prioritizing those loans in a way that is gone. And we didn't have to let it linger for any longer. And then we needed to, and really be aggressive of paying off that 42, 000 in about 15 months. So yay. Anyway, we're talking about setting goals. So that was our year in review. Now we're looking forward. And so now all of the extra money at the end of the month can go towards investing. And now this is going to, as we're moving into. this planning and goal setting portion. This is where we need to make our goal setting smart. And when I have my students write out their goals, we often get this really mistaken. And I've realized how important it is that the better the goal is laid out, the more realistic or the more probability we're going to have in actually achieving it. And if we, and so these, this is called the SMART goal, and I always get this messed up. Cause I always try to do this off the top of my head and I always get the R wrong, but S specific, M measurable, A measurable. Achievable, R, Relevant, and T, Time bound. And this is where we say, I have my students write out one to two financial goals. So we don't get crazy with it, but we need to really articulate this. And if you say, I want to save more money, I want to lose more weight in the new year. What does that actually mean? Technically you could save one dollar, and you're saving more money. Or you can save a hundred thousand dollars, you're saving more money. And that is not true. So let's try to get more specific try to nail down some more specific numbers and get a number in mind that is specific. And as long as we're speaking around numbers, we're going to give ourselves something that's a little bit more measurable. And so if we have some sort of goal of, I want to invest X amount of dollars in the measurable part means we can divide that into monthly. That means, if I get paid every month, I can achieve this by measurement. I can measure this out halfway through. I can measure how am I doing against my overall goal halfway through. That's the measurable part about being specific. We're also going to do something that's achievable, right? A goal that's achievable. And this is where the financial plan comes into play. You can write out your monthly budget, your monthly financial plan. If I got 5, 000 at the end of every month. Now I know, hey, 60, 000 in a year is going to be achievable to invest. If you want to eke out a little bit more, you can add that in, but as long as it's in that achievable realm, you're just executing your financial plan. That's where you want to go with investing. with the achievable part. I could do with some pie in the sky and I want 5 million. I have no plan. There's no way to measure it. Not sure how we're going to actually educate, execute that. I'm just going to somehow, I don't know, manifest this in my, my, I don't know, affirmations or something like that with no plan. Good luck to you. I it's fine, but I'm not going to put money on you actually achieving that goal without putting some sort of intention or purpose behind that plan. Also this is another one that I overlook when I try to write out the R, but as I move into this and I start seeing people either achieve these goals or not, the relevance of the R, the relevant and the relevance of your goals. So the why behind the what you wrote out the numbers in personal finance, it's so nice and so easy because we have the specific, we have the measurable and the relevance is where you really want to Take some extra time to unpack. Why do you want this? If you're getting out of loans, getting out of debt, what's the why behind this? This hopefully will give you more freedom, but when you start reaching a certain point, once you get out of debt and you start building wealth. You also really even more so have to think about why do I want to save this extra money? Why do I need to invest this? And for me it's around this idea of financial independence, building extra streams of passive income. That's the why. Cause now that we have our student loans out of the way, no other debts besides our house, we have to start thinking about, okay, what am I actually doing? Why am I doing this? And just set different targets. And but without, but with also thinking about the why am I doing this? And now all of a sudden when you start plowing away extra money, you can start building timetables of what does early retirement look like? What does my passions, what other things do I want to be doing with my life? That's where the Y starts to really become fun and in play. And then finally, time bound, put a time on it. I'm just going to eventually get there. No, I want to have net worth of X amount by this time, you can start doing that. And then you start building backwards. I want to have a net worth of a million dollars by the time I'm 40. You're 25 years old. Okay. Work backwards. How much do you need to invest each month to get there each year? What does that look like? And then how does that work with your current financial plan? What extra income do you need? What kind of savings rate do you need? All these different things can go in, but then you realize, Oh, I'm ahead of schedule or I'm a little bit behind a schedule and that's fine. But now all of a sudden you have this, because you have the time bound, the T in your goals, you can actually attribute. I'm ahead of schedule, behind schedule, and it gives you those milestones and a time standpoint, which really become beneficial as you move forward on your goals. All right, I think we've unpacked this. I've said enough. Questions need anything? What are your goals? What are you doing this year? And I hope they're good. Hope you have some good goals. If there's anything I can do to help you or support you, please do not hesitate to let me know. If you haven't already done so go ahead and check me out at Instagram. Brian, Dr. Brian Foltis on Facebook as well. Brian Foltis. com. You can also download the free Lifetime savings program on Brian Foltis. com slash money strong at the moment. So go ahead and get it while it's up there. 2025 program is available to you now. Thank you so much. Have a wonderful day. Thank you for tuning in to another episode of the Brian Foltis behavioral finance podcast. We hope you found our exploration into the fascinating world of human behavior and finance, both enlightening and thought provoking. Be sure to subscribe for future episodes and until next time stay curious and financially savvy