By Denise Keiser, Fund Development Specialist at Elder Law of Michigan
When it comes to New Year’s resolutions, there’s no better way to succeed than by setting SMART money goals. SMART is an acronym that is used in many goal-setting scenarios but is commonly associated with Peter Drucker’s Management by Objectives concept.
By applying the SMART concept to your money goals, you will be well on your way to developing a working plan that offers achievable endings.
Follow these basic rules when creating SMART goals:
Your money goal should be clear and precise, so you know exactly what you’re working toward. For example, one common money goal is to “save an emergency fund of $500 over the next three months.” Setting specific money goals helps you create a plan to achieve your goals.
To stay on track, you’ll need to make a money goal that is measurable. If your goal is to save $500 over the next three months, ask yourself this question: “How much will I save every paycheck?” So, in this example, your goal could be to save $41.67 each week for the next twelve weeks. Breaking your money goal down into measurable amounts makes it seem more possible to achieve.
To accomplish your money goal, it needs to be realistic or achievable. For example, to save $500 during the next three months, you’ll need to review your budget and either cut expenses or increase income to achieve the $41.67 per week savings to complete this goal. Be sure your money goal is attainable by keeping a balanced budget and tracking expenses along the way.
It’s also important that your money goal makes sense for your current situation and that it matters enough for you to see it through. Knowing WHY you want to achieve a financial goal is the key to staying motivated along the way. For example, one reason saving for an emergency fund may be relevant to you is that you want to ensure your ability to handle an emergency, like if your car breaks down. Or perhaps you simply want to reduce stress in your life about money-matters by having a safety net to fall back on. Better yet, maybe you want to save for a vacation with the family!
Every goal needs a target date to keep you focused so that you may see the end in sight, especially a money goal. If you’re making sacrifices in your spending or working an extra job to achieve your goals, you will know that it doesn’t have to go on forever by setting a target date for the goal.
SMART money goals allow you to define goals clearly. Using the SMART goal setting concept with money goals helps you focus and stay motivated while working toward each goal. Motivation is a critical factor in accomplishing any goal, especially a financial goal. You need the energy to keep going to see each goal all the way through to the end. Combine your SMART goals with a budget, and you’ll have yourself a written plan!
Denise Keiser is a Fund Development Specialist with Elder Law of Michigan and has been a member of the Elder Law of Michigan team since August 2017. As a Fund Development Specialist, Denise assists Elder Law of Michigan’s leadership with donor management, grant writing, and communications.