Setting “SMART” Goals For Your Finances

You may have heard of the “SMART” acronym in courses about goal setting - it means making sure that your goals are specific, measurable, attainable, realistic and time-bound. The Smart Spending blog has a useful post about how to apply “SMART” to your financial goals.

First of all, to be specific, you can’t just say “I want to be rich” - you have to say “I want to be free of debt” or “I want to own two houses”. To be measurable is an extension of this - for example, “I want to buy a house worth $400,000″.

Then, you have to make sure your goals are attainable - of course, you want to extend and push yourself a little bit, but you must set a goal that is conceivably possible - not (for most people) “I want to retire at 25 with a $20 million nest egg.” Similarly the goals have to be realistic, which means you have to define how you could realistically achieve these goals.

Last of all, it’s important that your goals are time-bound. You should have short, medium and long term goals and include dates as deadlines for when you want to achieve your financial goals.