SMART Goals: Making Achievable Financial Goals

SMART Goals: Making Achievable Financial Goals

Remember the time last year when you were making New Year’s Resolutions? You probably wanted to shed some pounds, re-organize your routine, or take up new hobbies. You may have also thought about making (or saving) more money and jotted down a financial goal or two.

Whether we are conscious about it or not, we make financial decisions on a daily basis. When you decide where to eat, what to buy from the grocery store, and which bills to pay, you make decisions that could impact your financial goals. It’s likely that you have goals of some sort too. It could be that you want to earn more, save more, reduce debt, or spend less. You may wish to hit certain financial milestones like finally getting a new home or renovating your kitchen.

It’s good to wonder about and question your financial goals from time to time. Goals, whether big or small, short-term or long-term, will set you out to the desired financial path. Maybe you wanted to save up enough down payment for a home in two year’s time or start investing that would run all throughout your retirement years. Or maybe you want to use a good portion of your income saving for specific goals like college and vacation, or you just want to simply live a good life on more generic terms.

When you make goals and aim for them, you also adjust certain habits to make those goals a reality. The best thing about having goals is that you find direction and purpose in every financial decision you make. You want to make decisions that are aligned with your goals and are best for your overall financial interests.

It’s always good to have goals, but that won’t be enough. It’s better to have SMART goals.

What are SMART Goals?

Smart goals refer to goals that are Specific, Measurable, Achievable, Realistic and Time limited. This is a criteria used to make goals easier to track and achieve. This way, it’s easy to direct yourself towards goals that you know are reasonably within reach. You get to use your energy and time effectively towards meaningful results.

SMART goals are commonly used to identify and measure goals in the business setting. In the financial sense, following the SMART method can also be just as beneficial.

Importance of Proper Goal Setting

So why is it important to even have goals in the first place? Maybe we can just sail by our daily lives each day without any care. But without goals, we become purposeless. Our dreams and actions remain worthless because we are not working for specific goals and it would be easy to settle down with just anything.

To Find Purpose

Goal setting allows you to become intentional and purposeful in your actions and decisions. You are not merely aiming to get a house, you are aiming to get a house of a certain type in a certain location, within a certain budget and time-frame. And with those perimeters in mind, it’s easy to start working on your goal of a dream home (or any other goal in mind) because you know you’re aiming for something sure and specific.

To Adapt to Changes

You might find your goals changing as you course through life. One moment you were dead set about getting a new car, but since your work requires you to relocate, you might focus your finances on finding a more suitable housing near your new workplace. You might have to focus your efforts on raising your family and establishing your finances rather than spend money on travels.

Goal setting allows you to make changes when the circumstances in your life change. You may have to cancel or postpone certain goals, but what’s important is that you keep setting goals even as your situation change. Goal setting gives you purpose and basis for making certain financial decisions.

To Focus Your Efforts

Proper goal setting allows you to see the things that matter to you in order of importance and helps you focus your efforts accordingly. You get to expend your energy and resources to the things you value the most. You tend to see things with greater clarity and work more efficiently towards your goals.

You may stray from your goals at some point or another. You may be too tempted to spend on retail therapy during a very emotional moment, but because you know what your goals are, it’s easier to steer yourself back to the right direction.

SMART Goal Breakdown

The SMART goal is broken down with the following meaning: Specific, Measurable, Achievable, Realistic, Time Limited. Let us inspect each one by one and see how each criterion applies to your own financial goals.


A specific goals refers to a goal in particular. For instance, it is inappropriate to say that the goal is to be rich. Without any benchmark, becoming rich is merely a wish or dream. You need to specify certain perimeters in order to say that you’ve achieved a level of richness. Would you say you want to become $10,000 richer by the end of the year? Or would a new car makes you fee rich? Does it need to be a certain type of car or would any other car do?

If you’re not gunning for “rich,” maybe you could set a goal that would put your lifestyle into “better” or “comfortable” categories. In order to achieve this, you need to define what better is. Would that mean additional income for more delicious food, more shopping and vacation? How much additional do you say you need to live a more comfortable life?

By being more specific with your goals, you also define the “need” in terms of quality and quantity.


The goal should be easy to count and quantify. Place a figure on your goals. If you’ve been wanting to save some money for some time and find that you aren’t saving any at all, it’s probably because there’s no figure next to your goal.

Consider a more measurable goal, like $50 each week. This way, you know exactly how much you expect to save and what your savings will look like given a certain period of time. Instead of being vague about a figure, go ahead and give it a more specific amount. The figure or number you wish to achieve makes it easy to measure your progress and determine if you’re on track with your goals.


All goals are attainable, but when set into the confines of the SMART goals, you’ll realize that certain goals are more achievable than others. In order to make achievable goals, you need to look at your own resources and abilities. For instance, if you wanted to save money, what is more achievable for you:$500 each month or $200 each month?

Now look at your budget to determine which amount is more attainable. You may be able to save $500 each month, but will you still have enough left for basic needs like food and transportation? If not, you need to scale back the goal so you can save money and still be able to meet all your other expenses with no problem.

Another example: say you wanted to go on a vacation with your family. You know you have some travel fund stashed somewhere, but after doing the computations, you found out that you can only a three-night vacation across the state instead of spending one week in the Bahamas. The vacation is achievable, but you need to pick a spot where your budget makes more sense.


A goal remains a wish if it is not possible. Many goals don’t materialize because you’re probably aiming way too high, beyond what you can currently afford. Hence, those goals turn into wishes and dreams and they remain to be that way unless you act on them.

What does a realistic goal look like? For instance, you know you always wanted to go on vacation to Europe. However, since you’re still paying for student loans, just got your first job with basic pay and no real savings to speak of, the European vacation may not be that realistic as of the moment. However, you can take a weekend vacation across the state or to your parent’s home town if logistics are not an issue.

It doesn’t mean that you can never go on that dream vacation, but given your current financial condition and circumstances, you may need to set it aside for a little while until you can afford to.

Time Limited

Your goal needs to have a deadline, otherwise, you’ll just keep pressing on not knowing when to stop. A deadline makes you want to work more and better because you’re up against time. It also helps you stay on track and be able to monitor your progress.

When would you like to make your goal happen? Would you like to be debt-free in X number of months/years or want to save $xxxx by the end of the year? Working against time can be a great motivator to stay on track and make real progress towards your goals.

Prioritize Your Goals

At this point, you probably think that you have a number of financial goals you want to reach, to a point that they overwhelm you. Don’t be guilty. In fact, it’s good to have goals. You know you want something out from life. However, you need to organize your goals in order of importance. This is what we call prioritizing your goals.

In order to get some semblance and order out of your goals, arrange them following a certain order. Consider starting with short-term goals to long-term ones. When you reach a short-term goal, you feel like you’ve achieved a milestone and this will keep you driven to keep reaching your other goals. Long-term goals will take more time to achieve and you may feel like you’re not making any progress if you’re not seeing any form of milestone.

Also consider prioritizing your goals according to urgency. You’ll most likely need to prioritize getting your roof fixed right away in preparation for the rainy season than spend money on a new limited edition bag. In lieu with this, you also need to make sure that “needs” come first before wants. You need to prioritize expenses that are essential for survival. If you have some money leftover, then you can treat yourself for luxuries.

Examples of Applying it to Your Finances

SMART goals are effective in giving your finances solid path and direction. By specifying your goals, making them measurable, attainable, realistic and time-bound, you’re in a much better position of achieving them than goals that are only generically formulated.

The best way to start making SMART goals is by running some math. Start with a budget. Any goal, whether it’s huge or small, need to have some computations behind it. The budget tells you exactly how and when you can possibly make that goal happen.

For instance, if you’ve been lusting after for a huge brand new TV for some time, but only want to pay for it in cash, then you need to break down the cost of the TV over a period of time. In your budget, you know you need to allocate $XXX amount each paycheck so that you’ll be able to afford it in cash.

Now to make things even more measurable and time-bound, you need to set a deadline. You might want to get the TV in three month’s time. Each time you get a paycheck, you need to throw in a certain amount into the TV budget so that by the end of three months, you’ll already be able to afford it.

This can seem like a simple scenario for a small financial goal, but bigger goals also benefit from SMART goal setting. It makes sense to follow this strategy when you’re mapping out finances for retirement, education, vacation, home and other big-ticket and long-term financial plans.

SMART Goals Are Flexible

While mapping out your financial life with SMART goals, you might find that your goals can change depending on different circumstances. The best thing about SMART goals is that they aren’t set in stone. Those goals or their priority can change when needed.

This can happen when some expenses erupt out of nowhere. For instance, a medical emergency can set you back by a couple of thousand dollars. Instead of pushing through with your dream kitchen renovation project, it makes sense to prioritize the medical emergency first at this point in time. The kitchen project can still go through after you’ve financially recovered. It may take the back burner, but it doesn’t mean you should cancel it entirely. It’s all about prioritization.

Second, SMART goals work best alongside sound financial habits. Budgeting, tracking finances, saving and investing are core principles to living a financially-sound life. Putting them into practice on a daily basis helps you make the best financial decisions.

It can’t be said enough how important it is to have goals in life, especially when it comes to your hard-earned money. Without goals, you would be spending carelessly. That could bring about a moment of bliss, but without considerations for savings and financial monitoring, you’d be lost when an emergency strikes.

What we all want is to enjoy life in a balanced way. You don’t have to deprive yourself of little luxuries just because you’re so dead-set on your goals. Your goals should paint you a better financial future, but it also doesn’t mean you can’t live your life in a good and happy way right now.


Think about it: SMART goals allow you to be happy today yet secured in the future. You need to have the foresight and prepare for the rest of your life, but you also need to loosen up a little and enjoy life. SMART goals allow you to make concrete, solid and tangible actions in order to map out your life financially according to a specific plan.

Having goals shouldn’t make you feel restricted. Instead, they should empower you more and fuel your desire to become better at handling your finances. You can have the best of both worlds and all it takes is some time of your day or week planning out your finances, revisiting your goals and checking in with your financial progress.