Setting Financial Goals

One of the keys to accomplishing financial goals is make sure they are SMART goals.  No, it doesn't mean that are dumb goals.  SMART is a planning method and means your goals are:

S - Specific:  define your goal in detail. 

For example, a goal to 'build an emergency savings' is a great goal, but lacks detail.  A goal to save three months of basic expenses (rent, transportation, food, and insurance) which adds up to $3,000, within one year, is very detailed.  

M - Measureable:  set a definitive amount.  In the above example, the goal is accomplished when $3,000 is saved. 

A - Action-oriented:  you need to do something.  Saving $250 per month (which, let's say is 15% of your take-home pay) is the action that must be taken to get to the goal.

R - Realistic: given current resources.  If your monthly take-home pay is $2,000, then trying to save that $3,000 in three months ($1,000 per month) would probably not be realistic. 

T - Timely: set a due date.  In the above example, 12 months is the time frame in which to save $3,000.

Goals are often further divided by time (short-term, mid-term, and long term) based on the amount of time it will take to reach the goal. 

Short-term:  goals that can be reached in about a one-year time frame

Mid-term:  goals that may take between two to five years to accomplished

Long-term:  goals that require more than five years to achieve

Click on SMART Financial Goals to set your own financial goals.