Life happens and sometimes external factors can make organising your finances a bit daunting. However, regardless of the financial stage you are in, setting goals can be a great way to provide you with direction and purpose to help you stay focused and motivated. When set properly, they can serve as a roadmap to guide your financial decisions and that’s why we are going to discuss how to set SMART goals in this article.
SMART financial goals allow you to break down your larger aspirations or needs into smaller, manageable steps. This helps you avoid feeling overwhelmed and enables you to make consistent progress towards your objectives. SMART is an acronym that stands for Specific, Measurable, Achievable, Realistic, and Time-bound. Let’s take a closer look at each element of SMART goals:
Specific Goals
Specific goals are clear and well-defined. Instead of setting a vague goal like “save money,” it’s more effective to set a specific goal like “save $1000 for a new phone.” The more specific your goal, the easier it is to create a plan and track your progress.
Measurable Goals
Measurable goals allow you to track your progress and determine when you’ve achieved your objective. For example, instead of setting a goal to “pay off debt,” you could set a measurable goal like “reduce $6000 in credit card debt within one year by paying $500 per month.”
Achievable Goals
Achievable goals are realistic and attainable given your current financial situation. Consider your income, expenses, and other financial commitments when determining if a goal is achievable. Like other goal areas, I would suggest an example is provided.
Realistic Goals
Realistic goals consider your resources, capabilities, and limitations. They align with your financial circumstances and are within your control. Like other goal areas, I would suggest an example is provided.
Time-bound Goals
Time-bound goals have a specific deadline or timeframe associated with them. They can provide a sense of accountability and help you stay focused. For example, instead of saying “save for retirement,” you could set a time-bound goal like “save $500 per month for retirement for the next 30 years.”
Setting SMART goals when budgeting can contribute towards financial stability and well-being while helping you create clear and actionable steps that align with your aspirations. To go further, you could also incorporate other strategies such as writing down your goals and organising them by priority.
Sure, unexpected things pop up from time to time and you may need to reset things. If you regularly review your goals and keep top of mind, it really will help you stick to them. Remember, it’s never too late to set new goals and work towards financial well-being.
Now that you understand the concept, you can go ahead and create your own SMART goals following a simple template we prepared to help you get started.
