If you’re setting goals and not achieving them, you may be setting the wrong goals. I have some top SMART financial goals to help you understand what they are and how you can apply them to your own finances.
Times are a changing...a little too quickly these days. Even before COVID-19 and all its ramifications basically turned the world as we know it upside down, stock market dips, interest rate fluctuations (affecting both borrowers and savers), unemployment, sickness and rising healthcare costs, and a host of other things have been happening—and will continue to happen—that not only cause stress and anxiety, but life-altering issues for those who haven’t quite gotten their finances in order and their savings for a “rainy day” in place.
Click here to read more how to financially prepare for a pandemic
It can be completely overwhelming when you know that you need to take better care of your financial health, but you have no idea how to even get started.
Setting Financial Goals: You have a goal, which might be something like, “Save money,” or “Pay off my credit card debt,” or “Have enough money to pay my bills each month.” And while all of these are commendable goals, and achieving even one of them could make a huge difference in your life, HOW do you put a plan in place to start progressing towards your goal? How can you go from “Save money” to actually saving money?
Make Your Goals Attainable + SMART
Setting goals seem so easy, and yet, they are often hard to accomplish. “Save money,” alone, is going to be a pretty difficult goal to achieve, if not impossible. Why? Because it’s too vague—there’s no direction in this goal...
- HOW will you save money?
- WHAT will you do to save money?
- WHEN will you save money?
- WHY do you even want to save money?
Let’s be totally honest: If you’re flying blind with your goal—not answering the above questions, you won’t achieve that goal. It’s as simple as that.
Here’s where SMART Goals come in. Making your goal a SMART Goal can really increase your chance of success for achieving that goal. And you can apply the SMART Goal process to any goal!
So, what are SMART Goals? And how can they help you achieve your financial goals?
SMART is a well-known acronym for...
S: Specific
M: Measurable
A: Attainable
R: Relevant
T: Time-Bound
Let’s break SMART down piece by piece so you can see how SMART Goals can be a valuable tool for helping you achieve your financial goals and the security that comes along with sound financial health. And to make things easy, let’s use this goal as an example, and we’re starting small so you can see how doable this process and achieving this goal can be!
“I will save $500 by the end of this year.”
Specific: This part of creating a SMART Goal will take the longest, but it’s so important to be as specific as possible when creating a goal. Here’s where you’ll figure out the how, what, and when for your goal. Ask yourself these questions, and then brainstorm some answers:
- How will I save $500 a year? It’s best to break any goal into smaller steps so it’s not quite so overwhelming to think about. For our goal, if you’re beginning on January 1st, those smaller steps could be $10/week, or $20 every 2 weeks, or $21 twice a month. Taking those super small baby steps will really add up AND you’ll feel that sense of accomplishment that feels so good!
- What will I do to save $500 by the end of this year, and when will I do it? Here’s where the action comes in, because achieving any goal takes action: no action = no progress.
Here are some actionable ideas for the “what” and the “when” for our goal:
- Have money deducted from your paychecks and automatically deposited into your savings account.
- Set up automatic deposits from your checking account into your savings account.
- Make a note in your calendar or in your phone to move money into your savings account each week or whatever time period works best for you.
- Do whatever you WILL do...Every. Single. Time.
Measurable: Can you measure your progress towards your goal? Data doesn’t lie, and the data is a crystal-clear picture of how you’re doing with your goal. With the goal to “save money,” you can see how that goal isn’t measurable, right? What and how would you measure it? But if you’ve completed the Specific step, your goal should be measurable—there should be data to back up your progress or lack of progress. You’ll be able to see your savings account growing based on the frequency of the deposits you’re making. If you can’t measure your goal, do some more work on these first two steps.
Attainable: Another important thing to remember about setting ANY goal is to make sure you WILL achieve it. If you can’t, you’re setting yourself up for failure from day 1, and you definitely don’t want that! In our example, if $500 this year isn’t doable, then lower that amount. If you honestly know you can save more than $500 this year, then raise that number! The key here is to be brutally honest with yourself.
Relevant: Is your SMART Goal important enough to you and your overall, long-term goal—save money—that you’ll do whatever it takes to achieve it? If not, then make some adjustments. If you don’t have a strong WHY behind any goal, it’s probably not going to get much traction, and the odds are that you won’t achieve it. And when times get tough, and obstacles get thrown in your way (which WILL happen!), a weak WHY, and a goal that isn’t relevant, are not going to get you where you want to be.
Time-Bound: Any goal has to have a time limit, or you won’t know how to progress towards it. And without a set time limit, how will you keep yourself from getting distracted along the way?
Stating your goal as “I will save $500 by the end of this year” has a definite finish line—December 31st.
And here’s a bonus step to setting a SMART Goal: Word it as “I will...”. Saying, “I want to,” or “I’ll try” gives you wiggle room to keep you from achieving that goal. Stating your goal as “I will” commits you to achieving that goal!
Start Making Your SMART Goals:
What will your first SMART Financial Goal be? Take a few minutes and do some brainstorming and write down everything you can think of that would take you closer to your overall financial goal.
Now, choose ONE of those things you just wrote down, and if necessary, choose the easiest one to accomplish.
Accomplishing a goal not only gets you closer to your overall goal, but it just feels amazing, right? And it gives you a huge dose of motivation as you get ready to start working on financial SMART Goal #2!
Want to chat more about SMART Goals or anything else financial? DM me on IG or message me at doctorfinances.media at gmail dot com.
