SMART Financial Goals: Stay on Target

Hello Financial Goal-Setter, Recently, I was talking to a woman about one of my SMART financial goals. I had been telling the person about my SMART goal to decrease my regular monthly grocery bill.  The woman chuckled, “Aren’t all goals smart? I mean, unless you have some dumb goal, like to rob a bank?”

So, after joining in the chuckling, I explained SMART goals to her.

Now, I think that it would be a good idea to explain SMART goals to you. Afterall, it is important to have financial goals, and it is best for those goals to be SMART!

Why Is It Important To Have Financial Goals? 

It is important to have financial goals because goals provide a clear direction and focus for your financial decisions. They help you prioritize where to allocate your money, time, and effort. Furthermore, having specific financial goals gives you something to strive for and can serve as a source of motivation.

So, go ahead and start thinking of some financial goals. But, be sure to make them SMART!

What Are SMART Goals?

SMART goals are goals that are organized in a way that makes them more likely to be achieved.

At this point, you may be wondering, “Why does she keep writing the word “SMART” in all capital letters?”

If you are wondering why I write the word “SMART” in all capital letters every time I write it in this letter, it’s because I am using the word “SMART” as an acronym, or an abbreviation with with each letter of the word standing for a word or group of words that describe how to make useful financial goals.

S stands for specific. M stands for measurable. A stands for attainable. R stands for relevant.  T stands for time-bound.

You should know that I did not invent this acronym. Instead the acronym and concept were developed by George Doran, Arthur Miller, and James Cunningham in 1981.

My Goal

As I mentioned in the beginning, I recently set a SMART financial goal. The goal deals with my grocery spending budget. 

In the past, I would spend whatever I wanted on food and groceries. I like organic foods, and I enjoy a batch of expensive vitamins. Also, I have to admit, after many years of preparing 2-3 meals a day for my family, I can actually says that one of my favorite things to have for dinner is reservations (or a takeout order from a fine dining restaurant.) 

One day, I looked online to find the current average monthly grocery bill and found that I was spending much more than average! 

This is what inspired me to set my SMART goal. 

Example Breakdown

First, I started by making my goal specific. My specific goal is to spend less than I had spent monthly on groceries. 

Step two was to make the goal measurable. I decided that I wanted to spend $200 or less monthly on groceries. 

Step three was to make sure that my goal was attainable. When I first decided on cutting my grocery budget, I decided to take a shopping trip to Aldi’s Supermarket. I was careful to buy only what I needed for the week that was coming up and spent only $37. Based on that I felt that I could achieve a $50 per week or $200 per month budget.

Step four was to make sure that the goal was relevant. My goal is relevant to me because it aligns with my values of not making others rich while not focusing on building my own wealth. Secondly, it matches my long term goal to build wealth by leaving me more money to invest. 

The last step was to make my goal time-bound. This means that I needed to give my goal a timeline. My timeline was to be able to regularly stay within my budget within 6 months of setting the goal.

By going though the five steps above, I created my SMART goal. 

Steps to Implement Your SMART Financial Goals

Focus on creating your SMART goals in a step-by-step manner. It is probably best to focus on one goal at a time when you first create one.

 

1. Identify your specific financial goals
2. Pick the goal with which you want to start. 
3. Break the down goal into smaller tasks.
4. Make sure that you set the goal up in such a way that it is measurable.
5. Make sure that your goal is attainable. Even if you have a large long-range goal, break it into smaller short-range goals that are attainable. 
6. Make sure that the goal that you set is truly relevant to you. People are more motivated to stick to relevant goals. 
7. Set a reasonable timeline for achieving the goal.
8. Monitor your progress regularly.
9. Adjust the goal as necessary.

SMART Financial Goals: Key Takeaways

1. SMART goals help you prioritize where to allocate your money, time, and effort.
2. SMART goals are specific, measurable, attainable, relevant, and time-bound.
3. When you first start with SMART financial goals, it is good to start with one. 
4. Break your goals down into smaller goals as necessary.
5. Monitor your progress regularly.
6. Adjust the goal as necessary. 

Another note…I think that I also need to point out that goals don’t all have to be forever goals. I am in a high savings mode right now. I definitely plan to go back to eating more expensive food. But, for now, I am increasing my investment income so that it can cover more of that expensive food. I must say, it feels good to know that I have the discipline to be able to cut back when I feel that I want or need to do so.

There you have it…not only can you achieve goals, but you can achieve SMART goals!

You can do it! I have faith in you. 

Just, focus on one step at a time, and always try to do a little better than yesterday. 

Hugs, 

Rich Mom

If you would like to read more about personal finance, check out: 

Emergency Fund Plan

Financial Wellness Mindset

Why Have Multiple Streams of Income

Ingredients of Building Wealth

Looking to read more about SMART goals? You can check out:

The Ultimate Guide to S.M.A.R.T. Goals