Question

Wk 1 - Personal Finance Mission Statement

Assignment Content

1. Write a 700- to 1,050-word personal finance mission statement that describes where you want to be financially and how you can get there.

   Include the following:

   1. An analysis of your personal values as relates to finances.
   2. An analysis of your financial goals. Include at least 2 each of short-, mid-, and long-term goals. Be specific. (Specify your time frame for short-, mid-, and long-term.)
   3. An analysis of your future vision as relates to finances.
   4. Formulate one simple action to take to meet goals and vision.
   5. Formulate one complex action to take to meet your goals and vision.

Answer 1

Answer: 1) What is Personal Finance Mission Statement:

A financial mission statement (FMS) outlines your household’s mission, purpose, and reason for pursuing financial security. A household may be just you as an individual, you and a partner, or you and your family.

A good financial mission statement will accurately explain what your household wants to achieve financially in the future and how you are going to get there.

It also incorporates your values. In other words, if you want to thrive financially without sacrificing things that matter to you, such as charitable donations or travel, you should include those in your mission statement.

There is no exact way to write an FMS but the shorter, denser, and more meaningful it is, the better.

Your FMS should be easy to read, memorable, and motivating. You want it to inspire you to take action or remind you of why you’re making the sacrifices you are to achieve your financial goals.

2)An analysis of your future vision as relates to finances?

1. Determine the problems or opportunities you need to address
2. Focus on what you are going to do to solve these problems and embrace the opportunities
3. Define your household values and determine how they will help you achieve your goals
4. Put it all together

Step 1 – Determine the Problems or Opportunities to Address?

In this step, you’ll want to include the problems and/or opportunities your family faces and how you are looking to correct them.

• Prepare statements that get to the point quickly and stress the areas you would like to focus on.

Examples:

If your primary problem is paying off debt, you want to include some motivational keywords to make you want to complete this task fast.

The financial mission of the (Your Last Name) household is to remove the vicious hold debt has on us. We will strive to aggressively pay down our existing debt and not increase our debt by taking out new loans or charging up credit cards.

You would also use this area to focus on financial opportunities that may be coming in the future. Looking to fund your Roth IRA fully each year? Put that in this section!

The financial mission of the “Smith” household is to fully fund both of our Roth IRAs each year. We also strive to place an additional $3,000 into our 401(k)s after funding the Roths.

Step 2 – Determine How You’ll Address the Items Defined in Step 1

Now that you have your focus points, state the path you are going to take to meet the goals.

If you said that you wanted to pay off debt, explain how you plan on doing it.

We want to aggressively pay down our debt by taking on additional part-time work and put into place several frugal habits. We realize that many of our previous spending habits were hurting us, and it is time to change those behaviors.

The statement focuses on how you are planning on paying down the debt. It also gives you things to focus on to ensure you complete the goals.

You could use the same statement for increasing your savings and investing by just replacing a few words.

We want to aggressively increase the savings we are putting into our retirement accounts by taking on additional part-time work and put into place several frugal habits. We realize that many of our previous spending habits were hurting us, and it is time to change those behaviors.

Step 3 – Incorporate Values and List How They Will Help You Meet Your Goals

In this step, you should inject your values into the FMS.

• Do you hate debt?
• Do you want to give 10% of your income to charities?
• Is paying for your children’s education important to you?
• Is travel a luxury you don’t want to cut out?

This is the section to include those things.

While completing our drastic debt reduction, we will continue to support our local charities. Also, in our quest to retire at age 55, we still want to enjoy certain things like traveling.

Step 4 -Combine to Get the Finished Financial Mission Statement

Now that you have finished each step above, you should combine your thoughts and goals into a complete financial mission statement.

Remember your statement should be motivational. You’ll want everyone in your household to remain focused on the financial tasks at hand.

3)Formulate one simple action to take to meet goals and vision, one complex action to take to meet your goals and vision?

The financial mission of our family is to remove the vicious hold debt has on us. We will strive to not increase our debt and aggressively pay down our existing debt without sacrificing our gifts to local charities. After we erase this debt, we will focus intensely on increasing our savings so we may retire at age 55 and do work that we love and enjoy. We want to accomplish this without becoming “cheapskates”. We also want to teach our children the ins and outs of money at an early age as we do not want them to face the same financial problems we have.

The above mission statement gets to the point and conveys exactly what the family wants to achieve.

It may not include all of the small things that will most certainly come around, but it at least keeps them focused on the financial task at hand.

It may take you a few drafts to finish your FMS, just get it down on paper and refine it until you get something that feels right.

When you’ve finished your financial mission statement, post it in an easy to see location, such as on your refrigerator in a bright color for all to see.

Keep in mind as your personal and family circumstances change, your financial priorities may change too. Revisit your FMS at least annually or when you experience a significant life event to update what financial goals are most important to your household.

Now, it’s time to get working on your financial mission statement!

Sit down with your partner or family if you have one and discuss all things money. There’s no better time than today!