Making SMART Financial Goals

How to Set SMART Financial Goals │I always advise my clients to make their goals using the smart method so they have the best chance of sticking with them AND achieving them!

Has anyone ALREADY failed on their New Year's Resolutions? February is when it really starts right? January is just like a write-off month?

Falling short on your goals can be really disheartening. It makes you not even want to make goals in the first place!

But, I’ve got a super not-so-secret trick that helps me stay on track with all of my resolutions (not just finances!) and that is: making SMART Goals.

Now, you may have heard of this method, but just in case you haven’t, SMART stands for:

Specific, Measurable, Attainable, Relevant and Timely.

Using the SMART method can help you structure your goals when you’re creating them so that they’re actually achievable AND you stick to them.

For Example:

If I have a client that says to me: “I want to save more money”. I’m going to say, excellent. I love hearing money saving goals! But what does this mean to you? HOW are you going to save it? How much are you going to save? When are you going to save it by?

This is why we use the SMART method:

  • We want to make the goal SPECIFIC, so we know what we’re actually doing.

  • We want to make it MEASURABLE so we can track our progress.

  • We want to make it ATTAINABLE so we know that it’s actually possible.

  • We want to make it RELEVANT so we can keep ourselves accountable.

  • We want to make it TIMELY so we know when we’ve achieved it!

Making the Goal Specific:

So let’s use this example and change it up a bit, instead of saying: “I want to save more money” Let’s make this goal SPECIFIC by giving it an amount. Say, $10,000. Once you make a goal specific, it’s usually easy to see how you’re going to MEASURE it. With this, we can take a look at a bank account and see how close or far you are to that $10,000. A good tip I tell my clients is that if you’re having trouble with the measurable part, it’s probably not specific enough, so you’ll need to narrow it down.

In this case, I’d suggest making it even more specific by giving it a deadline, say ‘the end of 2019’ so we’re able to clearly see how close or far we are to our goal given that timeline.

Making the goal Attainable:

If you want to save $10,000 by the end of 2019 make sure you can ACTUALLY achieve it. Go through your budget, figure out your available savings rate and make sure that aligns with the amount you want to save. For example, to reach $10,000 by the end of the year you’ll need to save $834 each month.

If you’re only saving $500 each month, then you won’t reach that goal. You’ll have to figure out whether you want to adjust the ending amount and save less, or makeup that difference with side hustles & extra income. Whatever your goal is, make sure you have a REALISTIC and attainable plan for achieving it.

Making the goal Relevant:

To make a goal relevant, we need to find our ‘why’. We want to make sure we’re keeping ourselves motivated and accountable throughout the process because it’s RELEVANT to what we want and fits in with our life. If you’re just saving $10,000 for fun, you’re less likely to achieve it than say, if you’re saving $10,000 towards a downpayment on a house. Make sure you understand WHY you’re making that goal, and how it fits in with the rest of your priorities.

Making the goal Timely:

Now, we already kind of did this when we made our goal specific, but whenever you’re making any sort of commitment, you’re going to want to make sure that it’s got a deadline. It really helps to give yourself a structure so you can understand how things are going, and know when it’s done.

‘By 2019’ is a great timeline because we’re going to know that by December 31st 2019 we’re going to have a completed goal.

Let’s do another slightly more complex, example:

Say, you’re thinking about switching banks, and want to use the next few months to ‘figure out the bank situation’.

1. You’re going to want to want to make it Specific, Measurable and Timely by asking yourself questions like:

What do I want to ultimately achieve? How will I get there? In what timeframe will I do this?

Do a big brainstorm of all the little subtasks and details you need to figure out in order to meet the ultimate goal of ‘figuring out the bank situation’.

Once you’ve done this, you’re going to have a better idea of how to ‘title’ that goal.

Instead of saying ‘figure out the bank situation’, after your brainstorm you might say

“By the end of March 2019, I will have researched and understood fees, interest rates and accounts associated with my banking products so I can make an informed decision about whether this bank fits my needs”.

This goal is specific. We know exactly what we want to do. It’s measurable because we can track how far along we are in the research given the amount of banking products we have, and it’s timely with it’s ‘deadline’ of March 2019.

2. Now we need to make sure it’s Attainable.

  • How many banking products do you have?

  • How much time do you think it would take to research each of them?

  • How much time do you think you could dedicate to this in the next 3 months?

  • Given all of those answers, does this timeframe make sense?

Make sure you think about actually how you’re going to achieve this goal before making it.

3. The last thing, is to make sure it’s relevant to your life.

Why are you reviewing your bank products? Does it fit in with an overarching priority of becoming more informed and financially knowledgeable? Or are you doing it because ‘you think you should’? Make sure you actually WANT to achieve this goal, for yourself. That’s where the accountability and motivation is going to come from.

If you’re interested in making SMART financial goals on your own I developed a step-by-step worksheet guide to help you out! Head over to my Free Resources Page to download it and get started on making your own SMART goals for 2019!

Let me know what your financial goals are in the comments down below.

Are you looking to save more money?
Get rid of your debt?
Organize your Finances better in general?

I’d love to hear what you all are working on!