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Course: Financial Literacy > Unit 4
Lesson 3: SMART goalsWriting your own SMART goals
Writing your own SMART goals involves creating personalized objectives that are Specific, Measurable, Achievable, Realistic, and Time-bound. This process helps in setting clear and attainable targets, which ultimately improve your chances of personal and professional growth.
How to write your own SMART financial goals
Now that you know what SMART goals are, you can use them to write your own financial goals. Here are some steps to follow:
- Think of a financial goal that you want to achieve. It can be short-term (within a year), medium-term (within a few years), or long-term (more than five years). It can be related to saving, spending, earning, investing, or giving money. For example, you may want to save for a car, pay off your student loans, start a business, or donate to a charity.
- Write down your goal in one sentence, using the SMART criteria. Use the questions and examples above to help you. For example, you may write, "I want to save
for a used car by saving from each monthly paycheck for months, because I want to have more independence". - Check your goal for clarity, realism, and relevance. Ask yourself: Is my goal specific enough? Can I measure my progress? Is my goal achievable with my current resources and abilities? Is my goal realistic given all the limitations? Is my goal time-bound with a realistic deadline?
- Adjust your goal if needed. If your goal is too vague, broad, or easy, make it more specific, narrow, or challenging. If your goal is too ambitious, complex, or hard, make it more realistic, simple, or manageable. For example, you may adjust your goal of saving
for a car to , or to . You may also adjust your timeline, your savings amount, or your income source, depending on your situation. - Write down the action steps that you need to take to achieve your goal. These are the tasks, strategies, or habits that will help you move closer to your goal. For example, some action steps for saving
for a car may be opening a separate savings account, creating a budget, cutting down on unnecessary expenses, finding a second job, or setting up monthly automatic transfers. - Review your goal and action steps regularly. Track your progress, celebrate your achievements, and address any challenges or obstacles that may arise. For example, you may review your goal and action steps every month, and record how much money you have saved, what worked well, and what needs improvement. You may also reward yourself for reaching milestones, such as saving
, , or of your goal.
SMART financial goals template
To help you practice writing your own SMART financial goals, you can also use this worksheet. Fill in the blanks with your own information, and check the boxes if your goal meets the SMART criteria.
SMART financial goals examples
Here are some examples of common financial goals, and how to make them SMART. You can use them as inspiration or reference for your own goals.
Saving for an emergency fund
- Vague goal: I want to save some money for emergencies.
- SMART goal: I want to save
for an emergency fund by putting aside from each biweekly paycheck for weeks, because I want to be prepared for unexpected expenses and avoid going into debt.
Paying off debt
- Vague goal: I want to pay off my credit card debt.
- SMART goal: I want to pay off my
credit card debt by paying extra every month for months, because I want to save money on interest and improve my credit score.
Buying a car
- Vague goal: I want to buy a car.
- SMART goal: I want to buy a
used car by saving from each monthly paycheck for months, because I want to have more independence.
Saving for retirement
- Vague goal: I want to save for retirement.
- SMART goal: I want to save
for retirement by contributing of my income to a 401(k) plan for years, because I want to enjoy a comfortable and secure lifestyle when I stop working.
Want to join the conversation?
- Hi,
One thing is not very clear to me. Let's go back to the budgeting strategy 50-30-20%. Maybe this is a dumb question, but here it goes.
Example: I want to save 5000Eur to buy a second hand car. My goal is to save 250Eur per month, which means it will take me 20 months to buy the car. Are those 250Eur coming from the 20% I save each month or should I be saving 250Eur extra each month?
Thank you.(8 votes)- OK. I'd say that the 250 per month are part of your program to save. The budgeting model does not say that you should never spend what you have saved, but that you should get into the habit of "living from" the portion of your income that is left after you have deducted 20% for saving.
One of the principles here is to have that emergency fund in your savings. So if you have that much "secure" and then build up the money for the car atop it, go ahead and buy the car. Just don't dip into the saved emergency fund to do it. And after the car is purchased, continue saving 20% per month, just on principle.(8 votes)
- I want to buy a car.(6 votes)
- OK. That's a clear goal. Have you any idea how much a car costs? Learning that number would help you set up a structure to get to your goal. Don't forget to consider the costs of owning (taxes, insurance, fuel, maintenance, etc.) You don't want to get a car just to have it parked in a garage someplace.
Go to it, and enjoy the ride once it arrives!(10 votes)
- i want to buy a tablet for art college.(2 votes)
- A tablet is a good thing to aim for.
Have you considered the other costs of art college? They can be high. If your resources are limited, you might consider starting in the Art department at a community college, where tuition is lower, and you might be able to continue living at home and then not have to pay for room and board.(4 votes)
- I want to buy a car when I am 10 years old(3 votes)
- I want to buy a house and start a family. Then I also want to help others and teach the word of God to preschool- sixth grade.(2 votes)
- You can probably get that Sunday school teacher gig sooner than the house, but there's no reason not to aspire to each of those 4 things.(2 votes)
- I also want to save for a ukulele.(2 votes)
- That's a wonderful idea. You'll reach that goal very quickly, when compared to saving for a Ferrari!(2 votes)
- "I want to save $57,600 by setting aside from my paycheck $2,400 per month for two years for building a better shop to work in more comfortably and use the old shop as storage."
Is this an example of a SMART goal? I want to test myself to see if I understand this completely.(1 vote)- You should make sure that your goals are doable. Most people can’t save $2,400 a month simply because they’re spending their income on mandatory and discretionary expenses.
Unless you think that your savings would be at about a 20% margin of your income, then I would lower your numbers to make them more realistic.(3 votes)
- I want to buy car(2 votes)
- Good. That's a great goal. Be sure to include the cost of operation in your target amount for saving.(1 vote)
- I want to buy a house(2 votes)
- That is a noble goal. Go for it!(1 vote)
- Very Interesting. Would writing down a SMART goal help you fine tone your money personality?(2 votes)