As the new year is now officially underway, it’s the perfect time to start setting some goals for the upcoming year. Setting financial goals is one of the best ways of ensuring your financial success, but some goal setting approaches are more effective than others. One of the most effective goal setting methods is the S.M.A.R.T approach. If you’re not quite sure what this is all about, read on. Here’s a breakdown of just what’s meant by the S.M.A.R.T approach, and how it can help you set excellent financial goals for the new year.
S is for specific.
It’s important to be as specific as possible when setting your goals for 2014. Having specific goals allows you to know exactly where you’re going, and what you’re striving for. For example, instead of saying “I want to save lots of money this year”, say “I want to have $10,000 in my personal bank account”. Or, instead of saying “I want to be debt free by next year”, say “I want to have paid off all my credit card debts by such and such a day”. (Incidentally, if you need help paying off multiple credit card debts, head here: www.foxsymes.com.au) In sum, when setting goals, the more specific the better.
M is for measureable.
Along with making sure your goals are specific, it’s important that they’re also measureable. How will you know you’re making the necessary progress towards your goal if there’s no way of measuring it? You can measure your goals by giving yourself mini goals throughout the year. To use the above example, this means committing to reaching certain saving targets each month (e.g., $3000 by May, $5000 by July, $7000 by September, etc.).
A is for achievable.
Of course, you need to ensure that whatever goal(s) you’ve set out for yourself is achievable. So sit down, take some time out, and figure out how much you’ll need to save each week to stay on track towards achieving your goal. If you’re left with an unattainable number (something along the likes of $10,000 per week on a $40,000 per annum salary) then you’ll need to adjust your savings goal. In other words, you need to be realistic in your goal setting. An unrealistic goal will only serve to add unnecessary pressure and anxiety to your life, and this is counter productive. Sure, you can stretch yourself and aim for a goal a little higher than what you’re capable of, but don’t set your sights too high or you’ll just feel disappointed and give up when you eventually realise you cannot achieve your goal.
R is for relevant.
Whatever goal you set for yourself in 2014, it’s important that it really matters to you. How will the goal help you in your life? What good will come from it? What kind of experiences can you have once you achieve this goal? Having a valid reason for why you want to achieve your goal will keep you feeling motivated during those tough times.
T is for time bound.
Last but not least, it’s important that your goals are time bound. This means you need to give your goals a specific time frame for when they should be achieved. For example, to use the earlier example mentioned above, set a goal of “having $10,000 in my personal bank account come the 1st of October, 2014”, instead of just saying you want to achieve it this year. A deadline will create a sense of urgency, and will help you keep track of your progress as well as keep you feeling motivated throughout the year.
As the popular expression goes, “if you fail to plan, you plan to fail”. This applies in all areas of life, including your finances. So make sure you set some S.M.A.R.T goals this year, and no doubt you’ll make much financial progress in 2014 and beyond.