How to Set Your Financial Goals

Learning how to set your financial goals is vital to reaching them. And just as important as it is to set a financial goal, it’s equally important to discuss and identify strategies to reach them.

A goal-setting method adopted from work and now incorporate into my personal finances is called SMART goals. This method helps to create structure, direction, and intentionality and will guide you when creating your goals.

SMART stands for Specific, Measurable, Attainable, Relevant, and Time-Bound.

Below you learn how to set your financial goals using the SMART goal method.

Is it Specific?

Your goal should be clear and detailed. Breaking down the details of your goal will help you be more effective.

Consider digging deeper with the following questions:

What do you want to achieve?
What are you achieving it for (vacation, investing, emergency fund)?
Who are the key players?
Why do you want to reach this goal?
Why is it important?

Is it Measurable?

Having measurable goals helps you to track your progress. It’s all about the numbers and working towards achieving them. You don’t want to be vague. You’ll want to specify the amounts you are working towards.

Consider digging deeper with the following questions:

Where are do I currently stand?
Where do you want to be?
What is the amount?
How many installments will it take?

Is it Achievable

It’s common to want to create lofty goals that may not be attainable, making it harder to stay on track and motivated till the end.

A goal should push you out of your comfort zone, but not to the point where it’s unachievable. Understand your barriers, consider all the possible outcomes and adversities. Ask yourself if it is it realistic.

Is it Relevant?

This question helps to validate the importance and significance of the goal in your life. If the goal is relevant it will help you stay motivated and enthusiastic about the journey towards achieving it.

Consider digging deeper with the following questions:

Is it going to make a difference in my life?
How will it impact my life?

Is it Time-Bound?

Giving yourself a deadline will give you a target to get the work done. Each of your goals should end with a date that you want to achieve the goal by.

Consider digging deeper with the following questions:

How long will it take me to achieve this goal?
When will I start?

Create a Strategy

This isn’t included in the SMART goal framework, but I consider it the most important. Now that you know your goal, what methods and strategies will you use to achieve it? How you will achieve the goal is just as important as the goal itself.

The goal is the destination, the strategy is the route. You cannot get to the destination without a route. When you set a goal it’s important to break down how you plan to achieve it.

If your goal is to save money here are some questions you can ask yourself the following questions:

Where is the money coming from?

Where are you going to save it?

Will it be auto deposited into your savings?

Will you decrease any expenses to achieve this goal?

How often will I make a payment?