How To Set SMART Financial Goals
Setting SMART financial goals can help propel you into a life of success and comfort. It's a lot easier to create financial goals than we realize and once we know the different parts of what makes a goal success we are 10x more likely to reach it.
Making your ideas something that you can visualize in your head and actively work toward is the core of SMART goals.
SMART goals are one of many methods you can use to get your credit in check, balance your paychecks, and reduce stress caused by financial anxiety.
Related Post: What are SMART Goals and Why You Need Them in Your Life
What are SMART goals?
SMART is an acronym that is used to break down big ideas into manageable parts.
Specific
Measurable
Active
Realistic
Time
It is a goal setting method used to organize your aspirations while making them something you can do in with your current circumstances. One of the reasons why goals fail or seem unachiebvable is because we want to do something without thinking of what it entitles.
What is NOT a SMART goal?
Let's say you want to raise your credit score but you have 8 different maxed out cards. Your goal, if you don't use the SMART method, may sound like "I'll clear the balances of my credit cards"
But if it were that simple you would of did it already.
You have to buckle down and figure out where your income is coming from, what you are spending money on, and, [if you stick to your budget] how long will this take you to clear the credit cards?
You'll be organized, prepared, and ready to tackle each card.
Related Post: This is why you can't save money
How can I create a SMART goal?
Get specific
There are various examples that you can follow but make a goal that fits your desires and what you can do. Your desires and your goals do not have to be separate.
And you can make changes without turning your life upside down and if everything does start to change try not to resist it. Maybe your current job, circle of friends, or even financial habits are holding you back.
Examples of specific goals
"Save $500 by December"
"Raise my credit score by within 6 months"
"Save for a car downpayment by the end of the month"
"Pay off my loan in two years"
Make sure it's measurable
The SMART goal should clearly be identified as achieved or not.
Yes, I reached my savings goal.
or
No, I did not bring lunch every day this week.
Examples of Measurable goals
Save $500 by the second week in December.
Notice how this goal now has a time frame. If you save the money and it's after the second week it's still an accomplishment it just wasn't this specific SMART goal.
Be Active
What do you need to do to achieve your goal? The small and big factors that we neglect to consider, make the difference between success and failure. An easy way to think of all the obstacles and resources that will factor into your goal is to answer the 10 questions that are below.
Some of the questions may not relate to the goal you're reaching now but they may come in handy with the next financial goal. Update the questions as needed.
Make a list of everything you need to be aware of
1. Write out your bills and their due dates.
2. How much is your income?
3. What expenses do you have?
4. Do you spend money on random things daily or do you wait until you've saved greatly to make bigger purchases?
5. What is your credit score? ( There are apps that allow you to get a free credit report)
6. How much do you have saved?
7. Do you have other ways to make money? (Without overwhelming yourself)
8. Are you interested in other ways to make money? (Not everyone wants to pick up a side gig)
9. Do you feel comfortable saving money in the house? Would you consider a savings account?
10. Do your goals involve anyone else?
All of it needs to be planned and accounted for. You don't wake up one day, after living in NY all your life, and suddenly move to California.
Or maybe you do, but there are still things you had to make happen in order to get there.
Related Post: 15 creative ways to save money in college
Be Realistic
Before you say you want to save 50% of your income or commit to the 50/30/20 method, make sure you are ready for what this entitles.
The average household spends $237 alone on utilities. That doesn't include grocery shopping, rent, babysitting fees, or clothes that the kids out grow.
Someone who paid off $10,000 in credit card debt in a year made changes that worked out for them, but this does not take away from your journey. If it takes you longer than those you see on social media this does not diminish your efforts.
$50 a week is $200 (sometimes $250) that can be put toward savings.
And if you are a single parents, a broke college student, or helping out at home, maybe a huge financial sacrifice can't happen today. But preparing yourself for the money moves you want to make will be the key to your success.
Modify your goals to ensure success, while being pushed within your limits. With time you can and will be able to do all that you set your mind too. SMART goals are all about building confidence and setting healthy habits in place to achieve those big wins.
How long will you dedicate to this SMART goal? A few months? A few days? A couple of years?
I recommend starting with a small goal. Simply because goals that take years tend to make you have greater moments of doubt.
If you aren't use to actively changing your spending habits, setting monthly, biweekly, or weekly agendas is a decent way to start.
It might take a few years to clear all debt, but just a few months to clear one of your cards.
Little wins count.
Don't give up
Saving, spending smartly, and avoiding splurging can feel like the most tedious chore ever.
Letting go of expectations and avoiding comparison will make the journey smoother. We often want instant results and when we don't get them we get antsy . Thus why there is fast internet and pulling out your credit card is 123.
But with this we are slow. Each money move is calculated and we will reach our financial goals day by day.
Slow down, and make each moment meaningful. Invest in yourself, realize what you're comfortable doing, and budget away.
Related Post: Spend Money and Invest In Yourself
In conclusion
SMART goals make life more manageable and interesting. They still challenge you but they're easier to work with because we know what to expect.
Let me know in the comments what goal you're working towards! Don't forget to SCROLL and grab your FREE guide for becoming your best self financially with a splash of self care!
