Goal setting is more than writing down a list of things you want to accomplish every New Year’s Eve. It is a skill that requires practice and discipline. I review my list of goals often. Then I do at least one task each day that gets me one step closer to accomplishing my goals. When it comes to financial goals I apply the same discipline. First, I set financial goals. Then, I put forth daily action to ensure my goals are achieved. Here are more tips on how to set your own SMART financial goals so you can have your most accomplished year in 2021.
Set Smart Goals
SMART stands for Specific, Measurable, Achievable, Realistic, and Time-bound (SMART). Your goals should be SMART whether you are saving to buy a home, paying down debt, or trying to start your own business. SMART financial goals help ensure you are successful.
An example of a SMART goal is:
I will save $500 in my emergency fund by December 31, 2021.
My SMART goal specifically states what I want to accomplish and how. It is also has a deadline of December 31st. Most importantly, it is a realistic goal because I could cut back spending or make more money in my side hustles to achieve this goal.
Most Americans don’t have $500 saved for an emergency. So a car accident, medical bill, or unexpected expense can ruin their finances. If you don’t have at least $500 saved for an emergency, save more now. Make this goal one of your SMART goals for 2021.
Make a Plan
Goal setting is only effective if you put in the work to accomplish the goal. Now that you know how to set SMART financial goals, write down an action plan. A plan guides your steps and keeps you focused. After you get started, you can always make adjustments to your plan if you see certain steps are not working or if your circumstances change.
It is best not to make the time frame to achieve a SMART goal more than one year. The longer the time frame the less likely you are to accomplish the goal.
Long Term Goals
Long term planning such as five and ten year plans for your family, business, and career are important. However, I would not use the SMART goals concept for long term goals. But you could use SMART goals for smaller steps that will help you achieve your five-year plan. For example, if you want to become a real estate investor with 100 or more properties in five years, you could set a SMART goal to purchase five properties each quarter or twenty properties per year. In this example, your immediate SMART goal is focused and limited to one year, but it’s also helping you to accomplish your five-year plan’s goals.
Ready, Set, Go!
You next step is to take action! Do something each day to help you accomplish your goals. Paying down debt or increasing your savings may require some adjustments to your budget. It may also require you to make more money. If your job is not paying you enough to accomplish your financial goals, think about ways to boost your income. Maybe you should start driving for Uber or Lyft or market a skill you have like tax prep, teaching English, or designing websites. If none of these ideas work start applying for part time jobs.
Whatever you do, before you start making extra money, decide how your money will be used. If you want to save more, then have the income from your new gig automatically deposited into your high interest earning savings account. If you are trying to pay off debt put the money on your credit card, school loans or other debt as soon as you get paid. Remind yourself when the first check arrives that this money has a purpose and should not be spent any other way.
It may take time and discipline, but once you accomplish a SMART goal, cross it off your list and celebrate. Give yourself a small reward for accomplishing something, but remember to sit down and plan another goal to replace the one just achieved. Eventually this habit will become second nature but until it does — stick to the SMART goal method to ensure your success.
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