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Posts Tagged SMART

Setting Financial Goals and Knowing the Why

It’s a new year and almost half of all Americans use this as an opportunity to start fresh. Approximately 42% of  those Americans who made New Year’s Resolutions made a money related resolution, yet less than 10% of us will be able to say at the end of the year that we actually felt successful in achieving our goals.

money goals

 

When my husband and I first decided to get on a budget and pay off our debt we were facing close to $59,000 in consumer debt that consisted of 4 credit cards, 2 lines of credit, and a car loan. Our why? We were sick of feeling as if we were living paycheck to paycheck.

We were tired of seeing our hard earned money go right back out the door in payments. We were sick of juggling minimum payments and living with a feeling of financial stress.

That’s when we found our “why”, we realized this wasn’t the life we wanted and the money was holding us back.

Understanding your Why:

Maybe your why is also to pay off debt. Perhaps you would like to save up and pay cash for a vacation. Are you looking at creating a budget to feel more in control of your finances? Regardless of your reason, it’s important to understand why and keep the end goal and the feeling that will come from achieving your piggy bank and calculatorgoal in mind.

In order to achieve success with your financial goals, you also need to know your why. If you are just going to create a budget or set a goal to ma
ke better financial decisions because it seems like the adult thing to do, sticking with a budget is going to be pretty difficult.

Getting on a budget is going to mean making some sacrifices and changing the way you approach your finances. It’s important to have a deep understanding of why you are willing to make a change to the way you are currently handling your money.

Once you know your why, how can you make sure you don’t lose sight of it?  What are those 10% of people probably doing to ensure their success? They are creating explicitly stated S.M.A.R.T goals and they have a deep understanding of why they are trying to attain that goal in the first place.

Setting a S.M.A.R.T. Goal:

A S.M.A.R.T. goal takes a general goal,makes it more specific, and increases your chances of successfully achieving it.

For example, a general goal might be “I’m going to pay off my credit cards”. An example of a S.M.A.R.T. goal is “I’m going to pay off $16,000 in credit card debt by December 31st, 2017 by making monthly payments of $1,334.00 per month.” Notice the diffe
rence? The first is a great goal to have, but is lacking in specifics. The S.M.A.R.T. goal is much more specific and includes an action plan.SMART Goal

So What Makes a S.M.A.R.T. Goal? 

  • S = Specific (What are your trying to accomplish?)
  • M = Measurable (Can you track your progress?)
  • A = Attainable (Have you planned your steps wisely to ensure success?)
  • R = Realistic (Is this a goal that you are motivated to achieve?)
  • T = Timely (Have you set a date that you would like to achieve the goal by?)

Be sure to check out Ryan’s post about how visualizing his goals helps to keep him motivated.

Your Turn!

  • What is your budgeting why?
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