Realizing your aspirations for setting and achieving financial goals involves first envisioning them and then establishing expectations for yourself. As you begin to work towards your goals, you may begin to gain more clarity about how to reach them. However, translating your aspirations into reality may at times feel like a formidable challenge – especially when it comes to your future financial security. If you find goal setting to be challenging, a well-thought-out strategy can significantly enhance your chances of success. Setting the right type of goals from the beginning can help you remain focused and on track, and an effective approach we’ll discuss below is to set S.M.A.R.T. financial goals.
Setting and Achieving Financial Goals: Understanding the S.M.A.R.T. Approach
S.M.A.R.T. is an acronym that encapsulates Specific, Measurable, Actionable, Realistic, and Timely. This goal-setting framework serves as a guide to visualize the end result, identify necessary steps, and gauge your starting point for each goal. Below, we’ll take you through each of this framework’s elements.
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Improve Your Outcomes by Getting Specific
The specificity of a goal enhances your ability to execute as you’re working on setting and achieving financial goals. This is because a specific goal provides you with more information about the pathway towards reaching it, thereby allowing you to better focus on the specific financial outcome you want to reach.
To make your goals more tangible, vividly describe them to yourself. For example, many people have a goal to improve the equity in their home by remodeling it. S.M.A.R.T. goal setting encourages you to make that broader goal more specific, such as ‘setting a budget of $30,000 to start the renovations with the kitchen and have that paid down within three years.’ With specific details, it is more likely that you can achieve your goal because you have set a financial goal along with a plan on how to accomplish it.
If you find it challenging to specify your goal, apply a “Who, What, When, Where, Why” strategy wherein you answer each of those questions. Breaking it down this way can provide you with some clarity and inspiration on your way to setting and achieving financial goals.
Ensure that Your Financial Goals are Measurable
After adding specificity, the next step in setting and achieving financial goals is to make them measurable. Determine methods to track progress and establish a schedule for check-ins. Consider the home renovation project mentioned earlier in this article: one of the ways to measure your progress towards paying off a $30,000 project within three years is to keep track of your savings. Beyond that, can you also measure if you are staying within your planned budget so that you can contribute to your savings? Setting and achieving financial goals also entails measurements that enable you to achieve small successes that help you stay motivated and moving forward. You can also utilize apps that can help you stay on track with your budget so you can keep measure of your financial goals.
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Choose Achievable Goals
While aiming high is admirable, practicality matters. When your goal is setting and achieving financial goals that are realistic and achievable, you need to examine your current situation and the resources available to you. Don’t set yourself up for discouragement by having to go back to the start. By setting goals that are within reach you are also setting yourself up for success.
For example, if you’ve recently purchased a home that you would like to renovate and have little savings to put toward the work, it may not be feasible to spend $30,000 and pay it off in three years. If you find yourself in a similar situation, here are a few suggestions:
- Understand that your goal is out of reach and readjust it. This could mean putting off the renovations or starting with a smaller project.
- Maintain your plans but change your timeline to 5-6 years.
- Consider alternate goals that will serve as interim steps toward your goals. This could entail paying down any existing debt so you can save for your home improvements and pay them down within your intended timeline in the future.
Setting and achieving financial goals doesn’t always mean choosing the easiest path. Setting and achieving your financial goals with the S.M.A.R.T. system should still be challenging but within reach. Setting goals that are not within your reach will likely leave you discouraged and may hold you back from taking consistent action. When you set achievable goals, you allow yourself to be motivated and encouraged because you can consistently and more confidently move toward them.
Make Your Goals Realistic
Realism involves evaluating whether your specific, achievable goals align with your life circumstances. Setting an achievable goal entails questioning whether or not you can meet that goal now or in the future. Setting a realistic goal is about determining goals that account for life’s uncertainties and if that specific goal makes sense for your life circumstances now and in the future.
Like living within your means, setting realistic financial goals that account for the inevitable life changes allows for a margin of error. There will always be circumstances that will set you back from achieving your financial goals, especially for long-term goals. It’s important to recognize that setbacks are part of the journey and plan for them ahead of time.
Make Your Goals Timely
Every financial goal should have a timeframe. This is the final step in setting S.M.A.R.T. goals. In setting and achieving your financial goals, placing a timeframe around them will likely help you take more consistent action. Deadlines can work wonders in helping you to achieve your financial goals.
Timelines aid measurably, especially with periodic check-ins to assess your progress. Time is a strong indicator of the progress you’re making toward achieving your financial goals.
Maximizing Success with S.M.A.R.T. Goal-Setting
Adapting to S.M.A.R.T. goals may take some adjustment, but sticking to the process increases success in your work toward setting and achieving financial goals. Recognize that not all goals are equal; thoughtful and strategic goal setting is crucial for financial well-being. Balance short-term and long-term goals to reinforce financial habits, maintain motivation, and dedicate time to each step of the S.M.A.R.T. framework for every goal. Then, adopt a broader perspective to create a comprehensive financial plan that aligns with your aspirations.
Our professional advisors at Resolute Wealth Advisor have expertise in helping our clients set and achieve their financial goals. If you think you can benefit from our professional guidance, please schedule a call with us to discuss your financial goals and aspirations. We look forward to helping you achieve more this year!
