Learn an Effective Approach to Achieve Your Financial Goals and Aspirations
Many of us often think about our financial goals for the near future or for the long term, but it can feel overwhelming if you’re unsure how to define them or make plans to achieve them. One of the biggest challenges is not having a clear framework to guide your planning. That’s where using S.M.A.R.T. goals for financial planning can be helpful in setting meaningful objectives, whether you’re focusing on retirement financial goals or other financial priorities. The S.M.A.R.T. method, which has gained popularity since the 1980s, offers a structured approach to help set you on the path to success. In this article, we’ll show how you can apply it to refine your financial goals and put plans in place to achieve them.
What Is the S.M.A.R.T. Method?
If you’re unfamiliar with the S.M.A.R.T. method, it was developed in 1981 by an energy consultant in Spokane, Washington. The inventor of the S.M.A.R.T. framework sought to establish a way to come up with “meaningful objectives.” It was initially proposed as a solution for business management goals, but the concept is easily translatable for personal financial use, and we believe you can find success by using S.M.A.R.T. goals for financial planning.
The S.M.A.R.T. acronym stands for:
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
The process starts with forming a clear idea of the goal you have in mind. It follows with a set of steps and directions that you create to get where you want to be. The S.M.A.R.T. method may seem like a thought-heavy, laborious task. However, when you devote yourself to working through it, you’ll create a practical strategy for achieving your retirement financial goals and more.
Be SPECIFIC About Your Financial Goals
As you begin envisioning your future, it’s natural to think in broad terms. While that’s a good starting point, it’s important to get more specific as you move forward. Why? Because having a clear and defined goal gives you a concrete target to aim for. The more specific you are, the easier it becomes to find the resources and strategies needed to support your plans. Using S.M.A.R.T. goals for financial planning can help make each step more manageable and guide you toward achieving your objectives with greater focus and direction.
For example, say one of your retirement financial goals is to save money to travel the world. The first thing you’d probably be specific about is where you want to go. From there, though, it’s good to get specific about how you get there financially. That can result in a refined goal statement like:
“I want to save $6,000 every year for five years for flights and accommodations for a three-month trip to Europe. I want to set aside a reasonable percentage every month after payday and reduce my discretionary spending.”
If this step is challenging you, consider taking the classic journalism approach of gathering information for a story. This is the simple act of asking “what, why, where, when, and how.” Unlike a news reporter, though, you’ll be asking yourself these questions in order to clarify your own specific goal statements.
Make Your Goals MEASURABLE
The next step in the S.M.A.R.T. process is making sure you can measure your progress toward your retirement financial goals. This involves coming up with how you’ll quantify and calculate results. It also entails scheduling regular check-ups, so you’ll be clear on your status.
Revisiting the vacation fund example above, you’ve already decided to save a certain amount. Breaking down the money, you’ve established that you’ll save $500 every month to achieve your $30,000 goal in five years.
The first step in measuring your progress is regularly checking your savings account. Subsequent steps might include checking against your current budget (if you’ve set one, which you should!). Are there certain discretionary items that you can cut back on or eliminate altogether? Can you use spreadsheets or a mobile app to help you stay on target?
You’re likely to find that, while making measurable goals is practical, it’s also encouraging. Each smaller goal you achieve while aiming for the greater one is worth recognizing and enjoying. So, don’t forget to give yourself a pat on the back as you make progress!
Make ACHIEVABLE Financial Goals
It’s natural to dream big, and there’s nothing wrong with that. However, it’s important to evaluate whether your financial goals are realistically achievable. This step in using S.M.A.R.T.
goals for financial planning can be one of the most challenging, as it requires you to take an honest look at your situation and assess what is truly within reach. This might not be a pleasant prospect. It can be demoralizing to realize that you might have to scrap your plans and start over. That’s not necessarily the case, though — you may just need to temper your expectations and adjust your goals.
In our vacation example, your goal is to save $6,000 every month for five years. However, what if you’re 40 years old when you set this goal? You’re still advancing at work, but it’s going slowly. Your expenses keep going up, and your investments may be weaker than you’d like. That goal of saving $500 a month might put stress on your life.
You don’t have to toss out your dream, though. You just need to find alternate ways of achieving it. You could change your monthly savings amount to $400 and delay the vacation date a year or two. You might even want to change your destination to a more affordable place. Tweaking your goals as you go – and as life throws you curve balls – is a smart way to maintain forward progress even through challenging times.
Set RELEVANT Goals
Setting relevant goals is key to achieving the lifestyle you aspire to. In the S.M.A.R.T. framework, this step emphasizes that your goals should align with your values, needs, and long-term aspirations. Relevant goals help you stay focused and motivated so that your efforts lead to meaningful progress.
When your goals align with your lifestyle vision, you’re more likely to stay committed and use your resources wisely. For example, if your goal is to save $30,000 for a three-month vacation in retirement, relevant actions might include setting up a dedicated savings account, cutting unnecessary expenses, or finding ways to boost your income. On the other hand, pursuing irrelevant goals could distract you and make it harder to reach that target, leading to frustration and wasted time.
To set relevant goals, start by reflecting on your lifestyle aspirations. Think about your values, priorities, and where you are now. Ask yourself why each goal matters and how it supports your bigger picture. The clearer your goals are, the more purposeful and directed your efforts will be.
Structure Your Goals to Be TIME-BOUND
The final part of the S.M.A.R.T. method is setting up an acceptable timeframe to meet the goals you’re setting. Money and time are tightly intertwined in this goal-setting process if you want to stay on track, so it’s highly beneficial to chart your financial future on a timely basis.
Returning to our example, you’ve given yourself five years to meet your vacation fund goal. You’ve also given yourself a monthly goal of saving a certain amount. Beyond that, you can set other efforts and milestones against time. Perhaps you’ve decided to take on a side gig to make your goal more achievable. How many hours will it require on a weekly basis? How long do you have to keep the side gig? Is it permanent, or will you only need a few months to keep your goals on track? Use this process to add additional time structure to your aspirations.
Are You Ready to Tackle Your Goals in the New Year? We Can Help!
Using S.M.A.R.T. goals for financial planning is an excellent way to give your goal setting a sense of direction, providing a structured roadmap to help you achieve the future you envision. While it’s important to focus on your retirement financial goals, it’s equally crucial to consider your short-term objectives and how they fit into your overall financial plan. By doing so, you set yourself up for both short-term success and long-term financial stability.
If you’re looking for a professional partner to help you develop a comprehensive financial plan personalized to your needs, we can help! At B.A. Schrock Financial Group, we help you unlock your financial future and focus on personalized solutions to help you achieve your goals. Contact us today to schedule a 15-minute introductory call!
