Are you tired of making resolutions every year and never making progress on them? Well this year try something different make some goals instead of resolutions. With goals you are much more likely to follow through and really accomplish something.
Goals that are SMART
To maximize your chances of achieving your goals, make them SMART:
- Specific- Every financial goal should have a specific dollar amount. Instead of a vague resolution like “I will save for retirement” be specific “I will save $5000 for retirement”.
- Measurable – You need to have a way to gauge your progress, since your financial goals should have a number it is easy to measure the progress. The progress percentage is the amount you have divided by your goal number multiplied by 100.
- Attainable – A goal must be something you have control over- like investing a certain amount. There is no point in setting goals on things beyond your control like getting a particular return on your investments.
- Realistic – Your goals should be realistic so that you can stick with them- if you make them unrealistic you will most likely become discouraged and give up on them.
- Timely – The difference between a dream and a goal is that goals have deadlines! It’s also helpful to break down goals into manageable pieces. For example ”I will save $5000 for retirement this year by investing $417 each month.”
I like to add two features to my goals- a reason for them and an at least clause. The reason is there to remind me why I chose this goal, and to remind me why I should sacrifice to achieve it. The at least clause opens up the possibility to accomplish more if circumstances allow. An example financial goal is “I will save at least $5000 for retirement this year so that I have freedom to live as I want by investing a minimum of $417 each month.”