Smart Financial Goals

Financial goals can help you save money, buy needed things, and put you on track to a better and brighter tomorrow. If you have made your 2024 financial resolutions, it’s likely you have already thought long and hard about what it takes to make financial goals and how to achieve them.

That’s all fine and good, but here at Empeople Credit Union, we’ve got a follow-up question for you in this blog: Are your 2024 financial goals smart?

Sorry, not smart. Let’s fix that. Are your 2024 financial goals SMART?

SMART goals, if you are not familiar with the acronym, come from a 1981 article by George Doran all about making sure your objectives in life are clear and reachable. In order to do that, each goal should be:

Specific, simple, sensible, and significant
Measurable, meaningful, and motivational
Achievable, agreed, and attainable
Relevant, reasonable, realistic, resourced and results-based
Time-bound, timely, time-based, and time-sensitive

Let’s take a closer look.

S – Specific, Simple, Sensible and Significant

So what do you want to accomplish and why is this goal important? You’ll need to answer these questions with as much detail as you can muster, because the more specific your financial goal is, the greater the likelihood that your motivation to see it through to the end will remain intact.

For example, you wish to save money and buy a car this year, because you want to go to the Drive-In movies. Ok, that is a very normal financial goal, and a great idea given last summer’s healthy entertainment options. You can help yourself make it happen just by being specific about the color, make and model of the car you want.

To bolster this initiative, clip and paste photos of your specific goal into a collected album and use those images to sharpen your motivational focus every time you feel it slackening.

Other questions to be answered in the S-Specific step of a SMART goal are:

Why is this goal important?
Who else is involved?
Where is it happening?
What are the limits of my resources?

If you can get clarity on all these questions, then you are on your way to success.

M – Measurable, Meaningful and Motivational

Let’s look now at the second priority in setting financial goals: Metrics. How will you measure your goal and why?

Making measurable goals is a fundamental task in achieving your financial objectives because at a bare minimum it lets you know when you are done. Want to save $1,000 for your new car? You will know it when you see the balance entry in your account ledger. And all along the way you will have an unmistakable signpost telling you how much further you need to go.

Track your progress and maintain your motivation by evaluating your steps along the way. Set measurable goals such as:

How much?
How many?
How will I know when the goal is achieved?

A – Achievable, Agreed and Attainable

In order to achieve success, a financial goal needs to be realistic, attainable and doable. Setting an achievable benchmark will guide you in creating the strategy and tactics that you come to employ while you engage in the day-to-day work of getting it done.

Ok, so here we are one step closer to the new car. Using SMART goals to guide us, we know what we want, and we now know how much it costs. The next step in determining the trajectory of our journey is to ask a few deep questions:

How can I accomplish this goal?

How realistic is the goal, based on budget limits?

How can I afford to do it?

So if we agree to save for a new car this year, and in order to do it we need to save a bundle of money in six short months, then we need to ask ourselves if current income supports this goal. If it doesn’t, that means we have identified a weakness in our SMART goal, and we can use this new information to change goals or else change strategy and tactics.

R – Relevant, Reasonable, Realistic, Resourced and Results-Based

Deep questions about the limit of your budget were posed in the previous step, and now we move into even deeper questions about your self. To get started we need to ask the following:

Is this goal worth achieving?
Does it seem like the right time?
Is the goal realistic and within reach?
Am I capable of doing it?
In the current economy is it a good idea?

Being relevant is all about making sure a goal matters to the goal-setter, and that the goal “fits in” with other relevant goals. For example, it might be achievable to save a thousand dollars towards a dream car this year, but is it realistic in a household of two adults and two children?

Deciding how to spend time and money in a busy family is a matter of priorities and choices. If you make a list of the people and things that can help you in your goal, you need to know if those people would be willing to give up their time and money for you. If you cut back will those people and things survive? Will taking these steps make them and you both happy?

Support and assistance are greatly needed by all of us in galloping off towards our goals, but it is important to hold on to the reins and keep control. Make sure that your plans drive everyone forward, but that you are still responsible for achieving your own pursuits.

T – Time-Bound, Timely, Time-Based and Time-Sensitive

You now know your specific goal, how progress gets measured, how you’ll do it, and whether it’s doable and realistic. What is next?

Now you need a deadline for your proposed goal – this portion of SMART goal-setting ensures you have time parameters to measure your progress and gives you a timeframe to work within. Time management is key.

Telling yourself to achieve a goal “as soon as possible” or without a time constraint at all could lead you down a confusing, seemingly endless path with your goal.

Ask yourself:

When is the deadline to get it done?
What can I do six months from now?
What can I do six weeks from now?
What can I do today?

Finally, when setting financial goals, sit down and write out a list of all of them, short term, and long term. It’s likely you’ll end up with short term goals within the next year, medium term goals over the next five years, and long term goals that go beyond a five year window.

With these goals clearly identified, now comes the part where you try to fit them into your monthly budget and track your efforts. Each month check to see if they fit into your life, whether you are making progress and how to adjust and stay on track to forge ahead.