Make SMART Goals as You Plan

goal settingGoal planning is the real “meat” of financial planning. That is to say, once you’ve covered the issues of organizing your information, developing and improving your net worth, and providing for the safety issues, it is now time to consider exactly what you would like to do with your money and your life.

This is a very personal set of decisions – no one person makes the same choices. Perhaps you’d like to open your own business, and become your own boss. Maybe all you’d like to do is to finish working after 30 years and spend your time playing with your grandchildren. Or maybe you’ve finished up college and now you’re beginning to earn some money, and so you’re planning on starting a family and buying a home.

Setting your goals is very important as you begin a savings and investing plan, because without a goal in mind, it is difficult if not impossible to “map” your way there. Of course, if all you’d like to do is save money for the fun of watching the amounts increase – that, in itself can be a goal.

Assuming that you’re not saving money just for the fun of it, a few guidelines are helpful in setting these goals. As you may have learned in other contexts, useful goals are SMART – Specific, Measurable, Action-Oriented, Realistic, and Time-bound. Below I explain these in order as they relate to financial goals.

Specific – Determine the cost of your goal. Maybe you’d like to purchase an RV and travel about the countryside. Find out what the cost of an RV is, as well as other costs associated with this goal. When do you want to do this? Be as specific as possible when describing your goal. With this information in hand, you’ve got an idea of how you can get from here to there. Since you went through and organized your information, you know where you are now (financially), and this is starts the process of actually developing a plan to reach your goal.

Measurable – Now that you know the cost of your goal, you can begin to measure your progress toward your goal year-by-year (or month-by-month, quarter-by-quarter, etc.). This is important so that you can see that you are progressing as expected.  Or perhaps unforeseen events have slowed your progress – by measuring progress you can know when to make adjustments to your plan.

Action-Oriented – By ensuring that your goal is action-oriented, you can easily visualize yourself enjoying the fruits of your labors once you’ve reached your goal. It is important psychologically that you have this kind of incentive. Visualization is a very powerful tool which helps us to achieve our goals. Have visual images to associate with your goals, to keep you focused on them.

Realistic – If a goal is unattainable, it doesn’t do anyone any good. That doesn’t mean that we should only pursue the easy things, because “stretch goals” are an important way to push ourselves beyond our comfort zone to achieve things that seem out of reach. Make sure that your goal pushes you to new heights, while at the same time maintaining a reasonable expectation. Part of this can be accomplished by breaking the major goal into smaller increments. You would then focus on the smaller goals first, always keeping an eye on the larger goal.

Time-bound – As mentioned in the “Specific” section above, you should put a timeline on your goals. Set the date to achieve your goal in a “Realistic” fashion, which will then make it “Measureable”, as well. This timeline is necessary to help with your measurement of progress and it brings everything together as you strive toward the goal.

Post originally appeared as Make SMART Goals as You Plan on Getting Your Financial Ducks In A Row

The post Make SMART Goals as You Plan appeared first on Getting Your Financial Ducks In A Row.

About the author

Avatar
jim@blankenshipfinancial.com (Jim Blankenship)

Leave a Reply

Copyright 2014 FiGuide.com   About Us   Contact Us   Our Advisors       Login