Setting Financial Goals: The S.M.A.R.T Way
How many of us have set a goal and it did not come to fruition? Studies show that most New Year’s resolutions fail during the second week of February. Whether you have already set financial goals or considering making them, it comes with numerous benefits. Not only does it help us continue on the path to financial freedom, but it can help you get your wants that you can’t live without.
So where do we start?! DWM has developed a 3-step approach for setting financial goals:
Understand the why
Be SMART about it
Have an accountability partner and/or tracker
I am not sure about you, but a lot of millennials including myself, have student loans. For the sake of walking you through the 3-steps, let’s use that topic as an example for a financial goal. The goal...making extra payments towards our student loans.
Understand the why. For some people, they don’t like having debt held over their head. For others, having this goal would cut down on the amount of interest owed over the life of the loan. Use the “why” as a motivator to achieve the goal.
Be SMART about it. SMART can be broken down into: Specific, measurable, achievable, realistic, and time. With this, we would need to slightly adjust our goal. Updated Goal: Make an extra $100 dollar payment on my student loans for the next 12 months. The key here is making sure the goal is realistic. This will prevent us from making lofty goals that are not practical given various constraints (time, resources, current obligations etc.) For example, saying you will make an extra payment of $750 per month when you can only realistically set aside an extra $100 is setting yourself up for failure.
Have an accountability partner and/or tracker. Sometimes we need someone to check in from time-to-time to see how we are with our finances. Just like we have gym trainers or study partners, we should all have an accountability partner for our financial goals. Additionally, tracking your goals will allow you to see if you are going to achieve them within the dedicated time horizon.
Whether its day 1 of the year, day 180 or even day 365; we should all consider making financial goals!
While on the topic, what would an extra $10,000 in your pockets mean in your life? Some of the top things that come to mind might be cutting down on your credit card debt, adding to your emergency savings, finally planning that trip overseas or even putting a lump sum payment down on your student loans.
This year we have partnered up with Millennial Financial Educator to start a new 52-Week Savings challenge! In 2021, we will be saving $10,000 as a group!! And in order to help keep us motivated throughout the year, we have created an exclusive slack community where we can share ideas and financial tips for reaching this goal.
Make sure to sign-up below and hold yourself accountable! Hope to see you on the sign-up list
Holding you accountable,
DWM