What should my financial goals look like?
Goals keep you motivated and help give purpose to otherwise mundane tasks like saving, budgeting, and investing. But what’s better than a goal? A SMART financial goal because it is:
Financial goals are more likely to be accomplished when they are specific.
Specific goals remove any doubt about what you want to do and why. “I want to save money” isn’t as clear as “I want to save $500 to keep in a separate savings account for a rainy day, emergencies only fund.” The second option makes it obvious how much you want to save, what it’s for, and where you’ll save it.
Money goals that aren’t measurable are just wishes.
You can measure your goals by putting a target number on it like a dollar amount or a percentage. For example, “I want to pay off $10,000 of debt” or
“I will save 10% of my income towards retirement each year.”
Financial goals that are achievable are less overwhelming.
It’s important that your goals aren’t so extreme that there’s no realistic hope of getting there. Consider the trade-offs and what type of lifestyle changes you’re willing to make to get to your goals. And remember, just because it’s achievable for someone else, doesn’t make it more or less achievable for you. Focus on your own timeline and priorities that you feel you can accomplish without too much stress.
Financial goals relevant to you are more exciting.
Instead of thinking, I should accomplish a goal, really think about what matters to you most. Do you really care about this goal because it is something you personally care about? For example, there’s a lot of pressure to be a homeowner as part of the “American dream.” But what if you hate the idea of mowing the lawn or dealing with a leaky roof? It’s okay to have goals that are not the same as everyone else’s, as long as they are goals that you are excited about accomplishing.
Putting time boundaries around your goals will keep up the pace.
Don’t fall into the trap of planning to do something about their finances “someday.” Give yourself a deadline by considering how long it will realistically (achievable) and include that date, plus milestones along the way in your plan (making it measurable). What can you do this year to achieve this? What can you do this month? What can you do today? That’s where to start.
Here is the difference between a wish and a SMART goal.
“I want to take my family on a vacation” versus “I will save $1,200 for a vacation to Disney World next June by transferring $100 from my checking to savings account on the 1st of every month.”
Have a financial goal and want help to make it SMART? Head to the dashboard and chat with a BrightDime coach today!