Make your financial goals SMART


Saving is a necessary practice for a healthy financial lifestyle. However, it’s important to decide what you are saving for. With a financial goal, you will determine how much money you need to save and when you will need that money by. Knowing these things will give you more specific context to assess the merits and effectiveness of different financial plans.

Even if you regularly save, you can still run into problems if you don’t set goals:

You might not have enough money when you need it.

If you don’t know how much money you’ll need and when you’ll need it, you might not have enough money when you need it. Saving 10% of your net income every pay period is a great accomplishment – but will it be enough when it’s time to cash out your savings? 

You might not know when it’s okay to tap into your savings or how much of it is safe to spend.

Perhaps you saved enough money to purchase a new vehicle – but what if you need money for something else later on? Will you have enough for both? Financial goals can give you the power to make sound financial decisions for the present and the future.

SMART financial goals

Your financial goals should be SMART: Specific, Measurable, Achievable, Rewarding, and Timely.


A specific goal is easier to plan for. “Create an emergency fund” is a well-intentioned goal, but there’s no way to determine when you’ve achieved it. Instead, try something like: within the next two years, I want to save six months’ worth of necessary expenses to use for emergencies.


Are you on track to meet your financial goal? If your goal is too vague, you might not have any way of knowing. A measurable goal means being able to track your progress. This will help you know when you must make adjustments to your spending and saving habits to reach your goal.


You don’t want your goals to be too easy, but you don’t want them to be impossible, either. Set a goal that challenges you to make realistic changes in your life to attain something worthwhile. If the goal isn’t worthwhile, you might not be motivated; if the challenges aren’t realistic, you might be discouraged by your lack of progress.


Achieving your goals should have an impact on your life; they should encourage personal growth and/or bring a satisfying change in your life.


Your goals should be set within a specific time frame. Decide not just what you want to save for, but also know when you want to have that money saved. Without a target date, it can be easy to drift along. Sure, you might eventually achieve your goal, but you might have been able to do so more efficiently had you set a specific end date.

Your financial goals

Are you ready to set financial goals for yourself? If so, a good place to start is with a review of your finances. Write down your monthly income and each of your monthly expenses. List all of your debts and all of your financial accounts. Having this information will help you figure out how much money you can save every month and can even give you ideas for your financial goals.

So, what do you want to do with your money? Do you want to pay off all of your credit card debt by the end of 2015? Or max out your IRA contributions every year for the next five years? Whatever your financial goals might be, having them will help you manage your money and make sound financial decisions.

3 thoughts on “Make your financial goals SMART

  1. I really like the idea of putting away at least 10% after every pay period. Would love to get my step-son caught onto this! 🙂

  2. Pingback: Mid-year financial review | Covenant Trust Company

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