How To Make S.M.A.R.T. Financial Goals

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Goals are dreams or wishes that could come true – if you work really hard at them. If your financial goals are specific enough, they will motivate you to balance your spending and savings in order to reach your objectives. If you don’t set financial goals, you will find yourself saying “I wish I had…” later on down the road; we can almost guarantee it.

Have you ever heard of S.M.A.R.T. Goals before? S.M.A.R.T. stands for Specific, Measurable, Achievable, Realistic, and Time-based.

S = Specific:

When first setting up a financial goal, be very specific about what you want to accomplish in the end. Think about this step as the “mission statement” for your financial goal. Some of the following are things you should consider:

  • Who – Who all needs to be involved to achieve the goal? If your goal is to create a family budget and stick to it, you’ll need to involve everyone in the household.
  • What – Think about exactly what you’re trying to accomplish and don’t be afraid to get very meticulous about the details.
  • When – You will get more specific about this question under the “time-based” action, but you should at least set a general time frame in the beginning.
  • Where – This “W” question may not always apply, particularly if you’re setting a personal goal, but if there’s a specific location or relevant event, categorize it here.
  • Which – Determine any related foreseeable obstacles or prerequisites. This question can be beneficial in helping you decide if your goal is realistic or not.
  • Why – What is the true reason for the goal? How is this financial goal going to benefit your finances and ultimately your life?

M = Measurable:

What metrics or data are you going to use to determine if you meet the goal? This makes a financial goal more tangible because it provides a way to actually measure your progress and results. If it’s a savings goal that is going to take several months to complete, then set some goal markers by considering detailed tasks to accomplish or an amount to reach at a certain month.

A = Achievable:

This section focuses on how important a goal is to you and what you can do to make it attainable or achievable and if it will require developing new skills and changing attitudes or bad spending behaviors. This one is meant to inspire motivation, to keep you going in the right direction. Think about how to accomplish the goal and if you have the proper resources, tools, or skills needed to get there.

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R = Realistic:

Realistic means to focus on something that makes sense for your current financial situation. You can set a goal of saving $100,000 in 4 months, but if you only make $2,500 a month that goal is not realistic AT ALL. You are only going to set yourself up for failure! Sit down and really think about what it’s going to take to reach this goal and if you’ve set the bar too high.

T = Time-based:

Anyone can set a goal, but if it lacks any sort of real time-frame, chances are you’re not going to succeed. Providing a target date or deadline is super important. If a goal will take 6 months to achieve, it’s helpful to define what should be attained half-way through the progression. Providing time constraints also creates a sense of urgency, and it can give extra motivation to those who need it.

Example Goal:

S = Plan to save for a down payment on a new car.

M = Plan to save $5,000 total for the down payment.

A = I will reach my $5,000 goal by saving $200 every month.

R = I can cancel my gym membership and food delivery subscription to help me save this amount each month.

T = By saving $200 a month, I will save $5,000 in 25 months, or 2 years and 1 month.

The idea of financial goal setting is to decide precisely what you want. Goals should be set and monitored or tracked closely because things can and do change. Goals can be short-term or long-term. Every family member should have a part or a say in deciding which goals are selected if it’s going to affect them in any way.

Avoid Impulse Spending –

Impulse spending is the #1 all-time budget buster, and most people don’t even realize they do it. To control your impulse spending, try these suggestions: keep your financial goals in mind at all times, shop less often, create a shopping list for everything and always stick to it, and leave your credit cards at home and just use cash.

Some other great suggestions are to use payroll withholding or direct deposit from your paycheck each month if your employer offers it. Save any additional income such as raises and tax refunds in a separate interest-bearing savings account. After you pay off an installment loan such as a car loan, mortgage, or student loan, continue to pay that same monthly amount but add it to your savings account instead. Save all of your loose change in one spot. It’s a surprisingly easy way to save, and those pennies really start to add up.

We hope that you start saving towards your financial goals today. There’s nothing stopping you from achieving everything you want! If you’d like to learn more about saving money, creating goals, managing debt or creating a budget, give us a call toll-free at 1-866-699-2227. You can also visit us online at www.advantageccs.org.

Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for AdvantageCCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.