Turn your goals into SMART goals
In January, I love to outline my financial goals for the year. Once I know what I want to accomplish for the year, I can then break my goals down by quarter, by month, and by week to help keep me on track.
Things always change and my goals have to adjust, but this initial mapping out of my goals serves as a guide for my goals for the rest of the year. It’s also really fun and exciting to dream about what I want.
Dream up some goals.
If you haven’t already, I highly recommend setting a timer for ten or fifteen minutes to dream about what you want. Most of us aren’t motivated by saving or investing more money for the sake of it. It’s the why behind our goals that get us excited and keep us motivated.
For example, having an annual budget in itself isn’t exciting, but it’s the peace of mind I get from it or knowing I can afford to take a summer trip this year that motivates me to do it.
So whether you want to build a rainy day fund, pay down your credit card debt, spend within your means, start investing, or plan to start a family, make sure to focus on what achieving that goal will give you. We want it to be exciting and motivating.
How to write effective goals.
Once we’re ready to map out our goals, how we write them is actually really important. When we write vague goals, we’re not setting ourselves up for success. It sounds really simple but this was a trap I caught myself in often. When we don’t know if we are on track or even achieving our goals, it’s hard to stay motivated.
Then I started using the SMART goals method. The SMART method is one of the most widely used and effective methods for goal setting. It also happens to be my favorite method, and I continue to use it to write all of my goals.
Using the SMART goals method we make each of our goals specific, measurable, attainable, relevant, and time-bound.
Specific
What exactly do you want to achieve? This is the who, what, where, and why of your goal.
Measurable
What exactly will you have, hear, or feel when you achieve your goal? How will you know when you’ve accomplished it?
Attainable
Is it possible for you to achieve this goal? Is the outcome in your control?
Relevant
Is it worthwhile? Are you willing to put in the effort needed to achieve this goal?
Time-Bound
By when will you achieve your goal?
Why SMART goals work.
When our goals are SMART, we can achieve them more efficiently and easily.
Specific and measurable goals
We want our goals to be specific and measurable so that we’ll know if we’ve actually achieved them (or are on track to achieve them).
This also helps us quantify them more accurately. If your goal is simply to “save more money” or “earn more money” (welcome to the club!), then, technically, all you need to do is save or earn one more dollar (or really one more cent!). That’s probably not the outcome you were hoping for.
Attainable and realistic goals
We also want our goals to be attainable. Is the result within our control? For example, “my husband will stop spending so much money” is not a truly achievable goal because we don't have direct control over what another person does.
Attainable also means realistic. Based on your budget or what you know about your spending, is it realistic for you to achieve this goal by the time you plan to? If not, how can you adjust?
Relevant goals
A goal’s relevance is also really important. There are some goals that you might be able to achieve, but do you really want to? Is your goal worthwhile and motivating for you? Without this relevance, we might be going after the wrong things and we’ll feel neither excited to achieve the goal nor fulfilled once we do.
Time-oriented goals
Finally, we want our goal to be time-bound so we’re clear about when we plan to achieve it. Achieving a goal one versus ten or twenty years from now can make a very big difference. Setting a timeline holds us accountable for what we want to achieve.
Example: Turn a vague goal into a SMART goal
A vague goal: “I want to save more money to travel,” becomes “I will save $5,000 by January 2024 to take a vacation to Morocco by transferring $193 per paycheck to a travel fund.”
is it Specific?
Oh yes!
is it Measurable?
Yes. I’ll know if I have the $5,000 saved as well as if I’m saving $193 per paycheck.
is it Attainable?
Take a look at your happiness allocation / budget. Does it seem feasible?
Is it Relevant?
Is it worthwhile? Another personal question. Think about why you want to save towards this goal. What will it provide you with? Is this motivating to you? How will you feel once you’ve achieved it?
is it Time-Bound?
Yes, the goal deadline is January 2024.
Turn your top goals into SMART goals.
Take a few minutes and turn your 1-3 top priority goals into SMART goals using the framework here.
Once you have your SMART goals, they become the motivation for everything that you do in your money life! They keep us going when things get tough or we make mistakes (which we all do!).