There are several ways to create goals but one of the best ways is to use the SMART method. It allows you to create manageable goals that can be broken down into actionable steps.
So what does SMART stand for?
Specific – What exactly what is to be done with the money involved?
Measurable – Exact dollar amount?
Attainable – Determine how it can be reached, which is often determined by your budget
Relevant – Is it attainable? Is it realistic? Are you able to achieve it?
Time bound – what is your deadline? Be very specific and determine when the goal needs to be reached.
Here are some examples of financial goals that do not use the SMART method:
- Build a 3 months emergency savings fund over the next year.
- I want to retire in 10 years.
- I want to pay off my debt, except my mortgage, in the next 3 years.
While these aren’t SMART goals because they are not broken down into specific amounts, attainability and relevance, they’re similar to goals I am guessing you and your partner will come up with.
Here are some questions to ask yourself when you are writing out your goals.
#1 – Is this attainable? Is this realistic? Can you really accomplish this goal in the time frame you have with the money you have available?
#2 – What steps do I need to take to make this goal a reality? Are these steps manageable?
#3 – Is this goal a priority? Am I committed to making it happen?
Whatever your goal is, you do have the power to make it happen. Step by step, you can make this goal a reality and achieve success in your finances. However, you and your spouse do need to be on the same page.
Beginning with writing out your goals and determining what goals you believe are priorities, is a good first step to doing this.
So here is an example of a SMART goal – Build up a 3 month emergency savings fun over the next 12 months totaling $10K.
S – Specific: build up an emergency savings account
M – Measurable: $10K
A – Attainable: Yes, this goal can be reached if I save $193/week and my budget allows for this.
R – Relevant: yes, it is achievable, it is realistic, I am able to achieve this if I stick to my budget.
T – Time bound: 1 year, 12 months, 52 weeks!
The best way to make sure you reach these goals is to take time to review your goals, create them with your spouse and/or family and make sure your budget is set up to help you reach these goals. You may find you exceed your goals just by sacrificing something that you don’t really need or by adjusting numbers elsewhere in the budget.
Download the SMART goals Worksheet PDF