How to Set SMART Financial Goals

Set Specific, Measurable, Achievable, Realistic, and Time-bound (SMART) goals to be successful.

Goal setting is more than simply writing down a list of things you want to accomplish every New Year’s Eve. It is a skill that requires practice and discipline, and goal setting is not something most people learn in school. You must review your list of goals often and do at least one task each day that gets you one step closer to accomplishing your goals. When it comes to financial goals the same discipline must be applied. First, set financial goals. Then, put forth daily action to ensure your goals are achieved.

Use SMART Goals to Get Started

The concept of Specific, Measurable, Achievable, Realistic, and Time-bound (SMART) goals was first introduced by George Doran, Arthur Miller, and James Cunningham in 1981. When first discussed, SMART goals were ways to improve project management, but since the 1980’s the concept of SMART goals has been expanded upon to apply to all types of goal setting.

Your financial goals should be SMART. If you are saving to buy a home, striving to pay down mountains of student loans, or trying to start your own business, SMART goals can help ensure your success.

An example of a SMART goal is:

I want to save $1,378 through the RRD Investments’ Savings Challenge by December 31, 2017.

January 1st of this year, my company, RRD Investments, launched a 52-week savings challenge on all our social media platforms. During the challenge, you save $1 the first week, $2 the second week, and then continue to increase the amount you save by $1 each week. If you make all of the weekly deposits you will have $1,378 saved by the end of the year.

My SMART goal specifically states what I want to accomplish and how. It is also time bound with a deadline of December 31st. Most importantly, it is a realistic goal because the RRD Investments’ Savings Challenge only requires you to save a dollar more than you did the previous week, and the highest contribution is in week 52 when you have to deposit $52. This SMART goal is very achievable as long as I follow the challenge and make my weekly deposits into my savings account.

Sign up for the RRD Investments’ Savings Challenge by clicking the link above.

Real Work Gets the Job Done

Goal setting is only effective if you put in the work to accomplish the goal. Now that you know how to set your SMART financial goals, you need to write down a plan on how to move forward. This plan will help guide your steps and keep you focused. Once 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 planning such as five and ten year plans for your family, business, and career are important, but for the sake of this argument I would not apply the SMART goals concept to those types of plans. However, you could use SMART goals to help you accomplish 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 is 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 supplement your income. Maybe you should start driving for Moovn or Lyft or market a skill you have like tax preparation, 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 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 this described planning and action method to ensure your success.


For more tips and tricks on how to save and improve your finances follow me on Twitter and Facebook. If you are interested in financial coaching contact me and the Spyka team here.

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