SMART Financial Goals

What Does It Mean to Set SMART Financial Goals?

We all have financial goals.

Some of us are hoping to save for the future and others will be looking to pay off the debt that they have already accumulated.

Many more individuals will be focused on trying to get the money together that they need to purchase a particular product or service.

Perhaps, for instance, you are trying to get some money together for your dream holiday.

Or, maybe you want to clear off your student loan.

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Goals can be long and short term too.

For instance, you might be trying to build up a college fund for your kids or simply be keen to make sure that you are going to have enough money in your accounts to buy Christmas presents this year.

So, the goals will be different for every individual and will often largely depend on the situation that they are in.

But how do we ensure that we actually reach these goals and that we are able to make progress on our finances?

How do we guarantee that they are not just empty promises and whispers that we say to ourselves about how we can do better.

The answer will be to set SMART goals.

A SMART goal is a process that can be used in the business world but the mindset will work for your personal finances as well.

Let’s explore why this is and what it could mean.


SMART goals as you may have guessed is actually an acronym and stands for goals that are:


  • Specific;
  • Measurable;
  • Achievable;
  • Realistic;
  • Timely.


While some of these may seem self-explanatory, it can be worth exploring each point in the term.

In doing so, you can make sure that you are following the template that will allow you to reach your financial goals.

This can be critical, particularly if the goals in question relate or refer to recovering from extensive levels of debt.

Making The Goal Specific

The first step is to make sure that the goal in question is specific enough.

You need to think about exactly how much money you want to clear within a certain time.

Or, you need to think about how much you want to save by a certain point.

So, it’s not enough to say that you want to clear your debt.

While this is a goal, it’s not specific enough which means that you’ll struggle to stick with it.

Instead, you should focus on clearing $500 within six months.

Or, if you want a goal with longevity, clearing $3000 worth of debt in three years.

If you do this, then you are far more likely to stick with the goal rather than if you are setting basic plans.

So, you need a concrete number and you need to understand how this goal relates to your finances.

It could be referring to saving, clearing debt, or even ensuring that you have an emergency fund to handle unexpected bills.

Furthermore, you want to make sure that you have a reason for this goal.

It could be as simple as knowing what the emergency fund might be used for.

Giving yourself a reason is going to guarantee that you know why you need to stick to it.

You might not know about how much debt you should be looking to clear within a set time.

It’s going to depend on a range of variables.

That’s why you should speak to a financial professional who can help or complete some financial counseling sessions.

Are These Goals Measurable?

If your goals are specific then they are always going to be measurable.

Measurable goals mean that you will be able to track them along the way.

It saves you from the issue of discovering that the goals are not actually being followed and that you’re not making progress.

There will almost always be an easy way to track money as long as you have already set a number that you want to achieve within a set period.

So for instance, if you want to save $3000 over three years then by the end of year one you should have saved $1000.

If you find that you’re running behind, then you’ll know that you need to save more in year two.

Otherwise, you will have to change the goal point.

You should try and avoid this because if you change them once then you’ll find that you are constantly changing them.

It’s a slippery slope.

Ideally, you should have multiple checkpoints that you will be able to use to measure your goals.

That way you’ll know that you are always on the right track.

Staying Motivated With Goals

So, now we know how to ensure that we understand our goals and whether we’re on our way to achieving them.

But what about staying motivated to reach these points?

Well, that’s another consideration that must be part of your plans.

To stay motivated, you need to think about why you are working towards this goal and how it is going to benefit you.

Think about how you are going to achieve your goal too.

So, this goes beyond setting measurable points.

You need to think about how you are going to reach them over time.

These steps are going to be different depending on the goals in question.

For instance, if you’re aiming to save an extra hundred each month, then you might want to change your food spending or spend less on entertainment.

You could even decide that you won’t be using the credit cards over the three years that you are looking to save $3000.

You also need to think about what your life will be like once you have achieved these goals and what it’s going to mean for you.

Finally, consider any roadblock that could get in your way on the path to success here.

Keeping Things Realistic

It is crucial that the goals that you set for yourself are focused on realism.

It’s great setting a goal to clear your debt in one year.

But if you’re over $40,000 in debt and your annual income is $45,000 that’s highly unlikely to happen.

It’s simply not a realistic point.

This is why research is critical.

A goal can seem realistic at first before you start looking at the numbers.

You need to start from a point of realism at the beginning.

Realizing that you’re not going to meet a goal can be depressing and this can be avoided if you start small.

Essentially, you need to think about the level of achievement that your budget will actually allow.

If it seems small, that’s okay because everyone has to start somewhere.

There’s no point in saying you want to save $1 million if your budget doesn’t allow for that to happen.

It’s great to dream big but the dreams still have to be contained by what you would realistically be able to achieve.

If your goals aren’t realistic enough, question how you can change them to create the right effect here.

Think about what point they should be at and take your current finances into consideration, rather than where you hope they’ll be a year from now.

Stay Focused With Timely Goals

Finally, you do need to make sure that the goal in question is timely.

We have already touched on this point by exploring goals that are specific.

But the timing of goals will be essential because it does tie into everything else.

It determines whether a goal that you have set is realistic and it determines whether it’s measurable too.

The trap that people fall into here is pushing to achieve their goals as quickly as they possibly can.

Or, simply stating that they want to achieve their goals as soon as possible.

Obviously, we all want to get from point A to point B as fast as possible in scenarios like this.

But it can be a dangerous path because it means that the path to the goal can actually seem never ending.

This will make you lose focus.

It needs to be at some point in the future but close enough that you can actually see the finish line.

You should write these goals down so that you know exactly what they are, how you want to achieve them, and when you want to achieve them.

When you are finished, you should have a healthy mix of both short and long term goals that you can then focus on.

You will also have a clear way of knowing whether you will have achieved them.

Get The Help You Need

We hope you see how setting SMART goals could benefit you.

If you need assistance with your finances and the goals that you want to achieve make sure that you contact us today.

A friendly member of our team will help you create a plan based on your financial situation.

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