Questions: My "Financial Concepts" Knowledge 10 ? Let's say you set a goal to save one hundred dollars a month towards a 2,000 emergency fund. In order to achieve that goal, you make coffee at home instead of spending 5 every morning at your local coffee shop. This is an example of: A short-term goal A "SMART" goal An opportunity cost A financial plan

The answer is an opportunity cost.

A short-term goal typically refers to objectives that can be achieved in a relatively short period, usually within a year. While saving $100 a month could be considered a short-term goal, the question specifically highlights the decision to make coffee at home instead of buying it, which is more about the trade-off involved.

A "SMART" goal is one that is Specific, Measurable, Achievable, Relevant, and Time-bound. While the goal of saving $100 a month towards a $2,000 emergency fund could be considered a "SMART" goal, the question focuses on the decision to make coffee at home, which is not directly related to the SMART criteria.

Opportunity cost refers to the value of the next best alternative that is foregone when a decision is made. In this scenario, the opportunity cost is the enjoyment or convenience of buying coffee at the local coffee shop, which is sacrificed in order to save money towards the emergency fund.

A financial plan is a comprehensive evaluation of an individual's current and future financial state. While saving for an emergency fund is part of a financial plan, the specific example given is more about the trade-off decision rather than the overall plan.