Learn how to reduce spending, increase income, and use crypto tools to achieve financial stability. 💰🚀 #PersonalFinance #Investing #CryptoEducation
Lesson 9: How to Set Personal Financial Goals–and Reach Them
Whether through traditional methods or innovative tools like cryptocurrency, careful planning and smart strategies are key to financial success. #FinancialGoals #PersonalFinance #Crypto #Investment #MichaelGSantos #PrisonProfessors
Lesson Intro:
The world’s largest crypto exchange, Binance, entered into a collaboration agreement with our nonprofit, the Prison Professors Charitable Corporation. With this collaboration, we’re able to provide justice-impacted people with a great resource they can use to learn about cryptocurrency, decentralized finance (DeFi), Web3.0, Artificial Intelligence, and other topics that relate to the digital economy. The agreement is part of our nonprofit’s ongoing efforts to help people prepare for success after prison.
Some people have access to our videos, others do not. If a staff member in your prison will authorize videos, invite them to contact Prison Professors for information on how we can send DVDs with additional educational materials to help people learn–and potentially an in-person presentation in your facility.
Each lesson includes critical thinking questions and a glossary. We encourage participants to use these lessons, and to memorialize their learning path by building a profile on Prison Professors Talent. More information on how to build a personal profile at the end of this workbook.
9. How to Set Personal Financial Goals–and Reach Them
Personal financial goals are the monetary objectives you set to take control of and manage your finances. There are many ways to reach your personal financial goals, from monetizing your hobby to drawing up a savings plan. As the cryptocurrency industry grows, it’s becoming another potential tool for meeting personal financial objectives.
What Are Personal Financial Goals?
Setting personal financial goals is the first step towards properly planning out your personal spending, earnings, savings, and investments. Without a goal, it’s hard to budget for how much you can spend and how much you should save. You’d also find it difficult to work methodically towards putting your personal finances on solid footing. In fact, research has identified that setting the right goals is linked to greater success.
These goals differ from person to person, depending on various individual factors. For some, it could be to save $1,000 every month. For others, it’s reaching $10 million in net worth. There are different strategies to reach your financial goals, but the two central methods are always to reduce spending and increase income.
How to Set Your Personal Financial Goals
When it comes to goal-setting, it’s important to use the widely-recognized SMART method, which stands for specific, measurable, action-oriented, realistic, and time-bound.
Personal financial goals need to be specific and measurable. Aiming to save $1,000 per month is specific and measurable, whereas saying you’ll save “some” money is not. These objectives also need to be action-oriented. For example, limiting your monthly spending to 50% of your salary requires action, but “I want to be rich” is too vague an objective that’s not action-oriented.
It’s also essential to create goals that are realistic and set within specific time frames. One common method is to organize your goals according to short-term, mid-term, and long-term goals.
Short-term goals can be accomplished within a few months or a year, mid-term goals (such as becoming debt-free or saving for your child’s education) up to five years, and long-term goals (such as buying a property or investing in a retirement fund) more than five years.
It’s good practice to always attach deadlines to your financial goals. Growing your investment portfolio to $10,000 by the end of 2023 is more likely to motivate you than the same goal without a deadline. Additionally, if you have multiple financial targets, make sure to plan and prioritize them carefully.
For instance, if you want to buy a property in 10 years, you can work backwards from saving for a $200,000 down payment to determine how much you need to save each month.
Strategies to Achieve Financial Goals
There are two main approaches to meeting your financial objectives: reducing spending and increasing income.
Reduce spending
- Track your spending: Before you can cut your spending, you need to understand where your money is going. Monitor your spending habits for a month and record all your expenses.
- Create a budget: Impose a limit on your spending to manage your money better by adjusting your spending habits and cutting down on unnecessary expenses.
- Live within your means: Spend less than you earn; sticking to a budget can help you avoid overspending. Also, try to avoid impulse purchases. It can be tempting to buy something on a whim, but wait for at least 24 hours before making a decision.
- Save consistently: Make sure to save a specific portion of your income each month. For instance, you can aim to save at least 10% of your monthly salary.
Increase income
- Savings with interest: Maximize your savings by putting them in an interest-bearing savings account.
- Side hustle: If your main job allows, take on a part-time job to generate extra income. You could explore the gig economy or even start your own business. If you have a hobby, think about how to monetize it.
- Passive income: Passive income is income earned without having to actively work for it. This type of income is often generated from investments, such as crypto, forex, stocks, and bonds. Other types of passive income include royalties from intellectual property and rental income.
How Crypto Can Help Achieve Your Financial Goals
Start a crypto savings account
If you’re not interested in active trading, you can consider generating passive income from your crypto holdings through a crypto interest-bearing savings account. Deposit your digital assets and earn interest on them instead of letting them stay idle.
Spend with crypto cards
When purchasing necessities, look for deals that allow you to save when you spend. This includes cashback reward programs and crypto cards that allow you to get back a percentage of your purchase amount in the form of credit, cash, or crypto.
Start a crypto reselling business
Thinking of taking on a new income stream? Consider reselling or distributing crypto gift cards to earn a profit. Crypto gift cards allow users to top up their crypto accounts and pay for goods and services conveniently and securely.
Become an NFT artist
Monetizing your hobby can be a great way to turn something you love doing into a profitable venture. If you’re a creator, there’s a billion-dollar market for non-fungible tokens (NFTs). There are numerous NFT marketplaces that allow artists to mint their own media creations and kickstart their NFT creator journey.
Invest in crypto to diversify your portfolio
Diversification is a risk mitigation technique commonly used in investment management. Crypto can be used to diversify one’s investment portfolio, though how correlated crypto markets are from other financial markets is debatable.
Ultimately, investing in crypto may be suitable for some investors as a diversification tool, depending on one’s risk appetite and investing style. Always remember that crypto investing is risky and not meant for everyone. For a step-by-step guide to crypto investing, start here.
Tips for Using Crypto to Reach Your Goals
DYOR
Crypto has its merits as an investment vehicle, but it also involves taking risks that other income-earning opportunities like freelancing do not entail. Hence, remember to always do your own research (DYOR) before taking on any financial risk. There are many ways to do so, and the more extensive your research, the more adept you’ll be at identifying potential risks.
Risk management
Risk management is a critical tool for investing or trading success. A good general rule to follow is to invest only as much as you’re willing to lose, and employ strategies to protect your investments. For starters, read A Beginners Guide to Risk Management to learn how to manage your assets responsibly.
Understand crypto tax liabilities
If you’ve started working towards your financial goals by investing in crypto, the next step is to understand and address your crypto tax liabilities. In some jurisdictions, a penalty may be imposed if you don’t pay the required taxes on your crypto earnings.
Closing Thoughts
Depending on your comfort level, current needs, and priorities, there are several ways to reach your financial goals. Some of these strategies can be used in combination with one another or on their own, depending on your preferences.
Regardless of your approach, remember not to rush into any potential financial opportunity, crypto or otherwise. Rushing in with a “high risk, high reward” mentality may backfire and set you back on your goals.
Further Reading
- What Is Forex Trading?
- Interest Rates Explained
- What Are Crypto Cards and How Do They Work?
- How to Make Your Own NFTs
- Why and How to Do Your Own Research (DYOR) When Investing in Crypto
Disclaimer and Risk Warning: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial advice, nor is it intended to recommend the purchase of any specific product or service. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. Not financial advice.
Critical Thinking Questions
- What strategies mentioned in the text could help you effectively manage your personal finances, and how can you implement them in your current situation?
- The SMART method emphasizes setting goals that are specific, measurable, action-oriented, realistic, and time-bound. How can you apply this method to create a realistic financial plan for the next year?
- Considering the potential risks and rewards, what are the advantages and disadvantages of incorporating cryptocurrency into your investment portfolio?
- How can tracking your spending habits and creating a budget contribute to achieving your long-term financial goals, and what tools or methods might assist you in this process?
- Reflecting on the importance of diversification, how can you balance reducing spending and increasing income to create a stable and diversified financial portfolio?
Advocacy Initiative:
We encourage participants to begin memorializing the ways they are using time in prison to prepare for success upon release. I encourage participants to create a personal profile by:
- Writing a simple biography
- Writing a daily journal to show all that you’re learning
- Writing book reports that memorialize the books you read
- Writing a release plan to show the ways you’re preparing for success upon release
These strategies helped me immensely once I got out. By using my time wisely inside, I was able to raise capital, build businesses, and succeed in ways that few people would think are possible for someone who served multiple decades in prison. Anyone can do the same—if they prepare first.
If you’d like to follow in the same footsteps, I encourage you to begin building your personal profile. Get started by sending an email message to our team at:
Prison Professors Talent
[email protected]
32565 Golden Lantern, B-1026
Dana Point, CA 92629
Our interns will accept your email invite. You may then send the interns a message such as:
Dear Interns,
My name is xxx, and I am in prison. I would like to begin showing the strategies I am using to prepare for success upon release. Please send me a Release Plan Workbook, and any other books that will help me prepare for the job market. After receiving those workbooks, I will begin building my profile to show others how I am using my time inside to prepare for success outside.
Sincerely,
Glossary
- Algorithm (noun): A step-by-step procedure or formula for solving a problem or performing a task.
- Bitcoin (noun): A decentralized digital currency that uses cryptography for secure transactions on a blockchain.
- Block (noun): A unit of data containing transaction information, which is added to a blockchain.
- Blockchain (noun): A decentralized digital ledger that securely records transaction data across many specialized computers on the network.
- Collision (noun): The occurrence when two different inputs produce the same hash output.
- Cryptographic Hash Function (noun): A hash function that uses cryptographic techniques to ensure data integrity and security.
- Data Integrity (noun): The accuracy and consistency of data over its lifecycle.
- Deterministic (adjective): Producing the same output from the same input every time.
- Hash (noun): The fixed-size output generated from input data using a hash function.
- Hash Function (noun): A mathematical formula that converts input data into a fixed-size output (hash).
- Hash Rate (noun): The measure of computational power used in cryptocurrency mining.
- Immutability (noun): The characteristic of being unchangeable once recorded.
- Merkle Tree (noun): A data structure used in blockchain to efficiently verify the integrity of data.
- Mining (noun): The process of performing complex calculations to validate transactions and add them to a blockchain.
- One-way Function (noun): A function that is easy to compute in one direction but difficult to reverse.
- Output Size (noun): The fixed size of the hash produced by a specific hash function.
- Preimage (noun): The original input data that is hashed to produce a specific hash.
- Resistance (noun): The difficulty of performing a certain action, such as reversing a hash function.
- SHA-256 (noun): A cryptographic hash function that produces a 256-bit hash, used in Bitcoin.
- Zero (noun): The leading character in a hash that meets the difficulty criteria in Bitcoin mining.
