Personal finance can feel overwhelming in the best of times. Balancing checkbooks, putting money into your account just to watch it drain out, paying bills, and staying on top of your rent, mortgage, or loans. All of these expenses can pile up, creating a mountain of the financial pressure that many people feel completely buried beneath.
Not to mention the need to save, preparing for a move, or paying college tuition, let alone saving for retirement.
Financial worries can seem like an impossible challenge, but they don’t have to be. In fact, by tackling your fiscal woes head-on and breaking them down into manageable, reasonable goals, the odds of you reaching financial success become better than ever.
Let’s take a look at the SMART fiscal goal setting and explore why it’s often the easiest and most rewarding path to total financial success.
To ensure SMART financial goals, your goals should be…
1. Specific
If you don’t set an overall goal or focus on your financial plan, you’re often setting yourself up for failure. One study found that over fifty percent of families who set specific financial goals made significant progress towards meeting them, versus just twenty-four percent of families who set no goals. The more specific you are, the better off you’ll be.
2. Measured
Keep your goals constrained to a specific and measurable outcome. For example, if your specific goal is to save for college, measure your goal in terms of semesters–“I will save for two semesters of college”. Again, the more specific and measurable your goals are, the easier it will be to achieve them, and the happier you’ll feel when you’re done.
3. Attainable
This one is hard for first-time financial planners to get a hold of, but it’s also very important to carry out. Unrealistic goals set you up for failure from the beginning: you work too hard, exhaust your resources trying to achieve them, and end up disappointed when you don’t meet your goal. By setting smaller and more attainable goals, you can succeed more easily at completing them and bolster your confidence and your finances slowly, one step at a time.
4. Relevant
Make sure that your financial plan meets your immediate financial needs. It’s okay to plan for a vacation or a luxury splurge, but should that be the priority in your monthly budget? That depends on whether you have other pressing needs. Make sure your monthly budget is apportioned appropriately according to those needs. You can still include rewards as an incentive!
5. Time-Constrained
Open-ended goals can stretch on forever. If there’s no deadline on your goal, you’re more likely to push it off when an emergency comes up. You’ll end up deferring your financial plan and pushing your goals to the bottom of the priority list to be forgotten for a while. Setting a specific time constraint on your goal makes it much more likely that you will accomplish it, even with time to spare.
Ultimately, setting financial goals is about finding ways to work with what you have while building your financial literacy and support base. Turn overwhelming money troubles into small, attainable goals that you’ll succeed with day after day. Rest easy knowing you’re on the path to financial freedom and success.
