How to Set Smart Goals and Why You Should

Setting a goal is easy. Setting a goal that you can achieve is a different story. If you’re like many people, you set a goal like “Improve My Finances.” It’s a good general goal but not one you can put into effect with these three words alone.

Think about those words for a moment: Improve my finances. What does that mean exactly? What is wrong with your finances in the first place? Do you have bad credit? Don’t make enough money to cover your bills? Have no money saved? If your goal doesn’t provide specifics, how can you expect to achieve it?

That’s where SMART goals come in. It stands for Specific, Measurable, Attainable, Relevant, and Time-based. Using this method pushes you to break down a vague goal into an actionable plan so that you can actually make your goal a reality.

Now that you see the importance of SMART goals, it’s time to learn how to set them. Taking the “Improve My Finances” goal into account, the SMART method would look like this:


Here you answer this question: What exactly do you want to accomplish with your finances? Let’s say, upon further reflection, you decide that you want to have more money saved.


You need to have a way of measuring that goal. Saying, “More money,” can mean having an extra $5 or $50,000 in your account. You need to determine what measurable amount you want so you can track your progress. For this example, imagine you’ve decided to have $1,000 more saved.


Your next step is to determine how you will reach this goal because a goal is not effective if you can’t achieve it. To be sure it’s achievable, you have to take into account things that might get in your way.

For example, you might not currently have a way to save $1,000. Digging into your spending and looking for ways to save, you realize that you pay $20 per week on coffee but you have a nice coffee maker at home. To make your goal achievable, your SMART goal could say, “I’ll achieve this by only making coffee from home.”


It’s hard to be motivated to achieve a goal if it’s not something you really care about. If you’re saving $1,000 just because financial experts tell you to, it’s probably not enough motivation to skip that coffee. If you make it relevant and personal, it resonates with you. In this example, your goal would be relevant if you’re saving to take your family on vacation.


When do you want this goal achieved and when will you start making steps toward it? Without a timeline, your goal can remain floating around as a theory. Setting a deadline triggers action. For this example, imagine you want this money saved by the end of the year.

Before the SMART method, your goal said, “Improve my finances.” After SMART, it says, “I want to save $1,000 by the end of the year to take my family on vacation. I will achieve this by not buying coffee outside of the home and putting $20 away each week, instead, starting Monday.” Adding specific dates makes it even more effective. Now that you’ve set your SMART goal, you can more easily put the steps into action.



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