Personal Finance

Setting S.M.A.R.T. financial goals

“A goal is a dream with a deadline.” ~ Napoleon Hill

When it comes to setting goals, many people use the acronym SMART. Experts agree that, in order to be most effective, goals should be Specific, Measurable, Achievable, Realistic and have a Timeframe attached to them. This guideline is just as effective for your financial goals as it is for general life and career goals. Often when I sit down with clients and we look at their income and outgoings they’re surprised by how much money they should have leftover at the end of the month compared to how much they actually have. The trouble is that if you don’t give your money a purpose it will quite happily drift away and become a meal out, or a latte, or a round of golf, or a new pair of shoes. Setting solid, SMART financial goals is a great way to give your money a purpose and channel it into working for you rather than the bottom line of your favorite retail store!


When setting financial goals you need to be clear about what it is that you’re aiming for. Define exactly what it is that you’re saving for; is it retirement, a vacation, a business venture, a new house or big-screen TV? Whatever your goal, be specific; for example instead of setting the goal to “pay off my credit card” you set the goal to “clear the $5000 balance on my credit card by December 2013”. Being specific about your goal allows you to devise an action plan for how you’re going to achieve it; how much do you need to save and how much will you commit to meeting your goal each month? Once you are clear on your goals write them down – the often quoted Harvard/Yale goal studies are actually an urban myth but a 2008 Dominican University study conducted by Gail Matthews Ph.D.shows that people who commit their goals to paper have significantly higher rates of success than those who don’t. Those with written goals who also have an action plan and an accountability partner are even more likely to succeed. Writing a goal down sends a subconscious message to your brain that you are serious about making this goal a reality; it’s a commitment to taking action. Accountability keeps you on track.


Your achievement of the goal and your progress towards it need to be measurable. How will you track your progress? How often will you “check-in” to make sure that you’re on track? For example: If you set a goal to pay off your $5000 credit card debt in 12 months then you can project what your remaining balance should be every month or every 3 months and monitor your progress to make sure that you’re on track. How you monitor your progress is up to you – some people like to use tools such as computer spreadsheets while others (like me!) prefer a piece of paper on a pinboard. Whatever method you choose make sure you use it and if, after a while, you find it’s not working then try other methods until you find one that works for you.


This part is a little less relevant to financial goals than to career or life goals but it’s still really important that your goal is achievable. If you’re going to devote your time and energy to working towards something then it makes sense to ensure that you stand a good chance of achieving it.


This is key. Too often, people get discouraged and don’t meet the goals they set for themselves because they weren’t realistic. If your goal is to buy a $2000 big screen TV in October and you only have $200/month to commit to your goal then you’re not going to have enough to buy the TV in October. If you find your goals aren’t realistic then modify it – can you commit $700/month instead of $200? Could you buy a cheaper TV? Can you extend your timeline so that you’ll have the big screen TV in June? Get creative but be realistic – it’s in your best interests to set yourself up for success.


Giving your goal a timeframe makes it real. Having a deadline not only gives you something to work towards, but it also gives you something to get excited about. Have you ever noticed how much more exciting a vacation becomes once your flight is booked? There’s something about having a definite date that tells the brain “this is really happening” and gets you fired up and energized. Having a timeframe also keeps you accountable to your intentions and encourages you to take the steps that you need to in order to get from where you are now to where you want to go.

Finally, don’t forget to CELEBRATE!

Depending on the goal, your timeframe may be short or, in the case of retirement, much further away. Whatever your timeframe it’s vitally important to celebrate the accomplishment of every step along the way to your goal. Too often we focus on what we still have left to achieve and don’t give ourselves credit for what we’ve already accomplished. Giving yourself a pat on the back reminds you that you’re achieving something and the satisfaction of completing each step will motivate you to keep moving forward. Having a goal-setting partner to keep you accountable can also be really useful. The goal-setting group that I’m part of has been instrumental in helping me achieve my goals; knowing that each month I’m going to have to share my progress and celebrate everyone else’s is a great motivator when I’m feeling lazy or discouraged!

Whatever your financial goals, taking the time to define them, create an action plan for achieving them and getting excited about the life you’re creating for yourself by reaching them is well worth it. You work hard for your money, it should be working hard for you!


  1. Rhonda

    We use SMART goals every year for our performance management plans. It’s something my employees continually struggle with, and although I’ve coached them on how to use this technique for business goals, I’ve never thought of applying to my own personal financial goals. It makes so much sense, and writing it out (and even telling someone else about it) makes you that much more accountable to ensure a successful outcome!

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