Setting goals can lead you on a path to success that influences every aspect of your life. Indeed, goals provide us with a sense of direction, give us inspiration, and help clarify what’s most important.
Not to mention, the benefits of setting financial goals help us achieve pursuits like financial freedom, a bigger savings account, or a down payment on a home. If you’ve been contemplating changes but aren’t sure how to get started in your goal setting, you’ll be happy to know you can lay the foundation right now.
Let’s examine how SMART goals can help you reach your ultimate money-saving goals:
What is a SMART Goal?
SMART is an acronym that stands for specific, measurable, achievable, realistic, and timely. Therefore, a SMART goal incorporates all of these criteria and helps you focus your efforts, thereby increasing the likelihood of achieving your goals. Additionally, SMART goal-setting establishes structure and accountability by creating verifiable paths that lead to an anticipated outcome.
SMART goals are:
Specific: Well-defined and clear. Know what you want to accomplish
Measurable: Specific criteria measures your progress
Achievable: Attainable and possible to achieve
Realistic: Provides a realistic and relevant goal that aligns with your purpose
Timely: Includes a well-defined timeline with a start date and a target date, thereby creating a sense of urgency
Setting savings goals using the SMART goal method allows you to have extra money for all the things you want without having to rack up credit card debt or take out loans. You can purchase big-ticket items interest-free by utilizing your savings. And did you know there are apps to help you track your wish list and savings goals? Indeed, you’ll find a beneficial resource for tracking your savings with the Monorail app. Connect your bank account directly to your wish list and watch your savings grow!
Writing Your SMART Goal
Writing your SMART goals is the first step in establishing the best navigation toward hitting your target and provides you with a plan that eliminates wasted time and effort. But as you get started, examine the following criteria for each point of the SMART goal you’re setting.
Specific SMART Goal Questions:
• What: What do you want to accomplish?
• Why: Why do you want to achieve this goal?
Measurable SMART Goals:
• How much do you want to save?
• What is your indicator of progress?
Achievable SMART Goals
• Do you have the resources and capabilities to achieve the goal? If not, what are you missing?
• Have others done it successfully before?
Realistic SMART Goals
• Is the goal realistic and within reach?
• Are you able to commit to achieving the goal?
Timely SMART Goals
• Does your goal have a deadline?
• By when do you want to achieve your goal?
Example for Creating a Rainy-Day Fund Using the SMART Formula
To get started, you’ll want to remember the SMART goal formula: specific, measurable, achievable, realistic, and time-based. Your first step begins with deciding why you want to start saving and how it will help you. Next, measure how much money you need to support yourself every month. Financial advisors say rainy-day funds should be able to support you for three to six months.
For example, your new goal is to fully fund a $6,000 rainy-day fund by creating a monthly budget. Suppose you can set aside $250 monthly toward your rainy-day fund. If your budget isn’t stretched by monthly debt (realistic), then you should be able to save. If you realize you can’t meet other financial obligations (achievable) and also save, you may want to readjust your goals and make paying off debt your first goal. And last, you’ll want to make sure your goal has a time-based factor. If you save $250 per month, you will reach your goal within two years.
Staying the Course
Whether you’re saving for wish list items, planning a vacation, or wanting to build a nest egg for life’s costly, unpredictable moments, setting a SMART savings goal will provide you with the formula you need for success. Furthermore, consider the aforementioned tips and take advantage of banking apps for the ultimate experience in reaching your financial goals.