Why setting financial goals is SMART

Setting financial goals is a key part of budgeting and growing financially.

When thinking about setting financial goals, it’s smart to think of SMART goals… But what does that mean?

SMART is a framework where you can measure your goals against a set of criteria that will help you plan exactly how you’re going to reach them. Below is how you can apply the SMART criteria to your financial goals:

• Specific:  Clearly define your goal. For example, if you plan to save for a vacation, know where you want to go and the total cost. You can use this as a target.  
• Measurable:  Establish indicators to track your progress and help you reach your goal. For example, in the vacation savings scenario, you can set milestones like saving a specific amount each month to pay off your flight or save for a dinner at a trendy restaurant. 
• Achievable:  Know if you have the necessary resources to reach your goal. Consider what you need to make your goals attainable. If saving for a vacation, you might need to cut down on non-essential expenses or add to your income short term.  
• Relevant:  Ensure that your financial goals align with your personal values and priorities. If a vacation aligns with your desire to travel and adventure, it’s a relevant goal. Keep in mind other people’s goals may not be realistic for you, and there is nothing wrong with that! Not everyone catches the travel bug: you may want to save for home repairs, education costs, retirement, updating your wardrobe etc.   
• Time-bound:  Set a realistic timeline for achieving your goal. In the case of your vacation savings, know when you want to go on your vacation, and set measurable timelines of when things need to be marked off the list to meet your goal.   

Creating SMART goals can provide structure and clarity, helping you stay on track and achieve what you’ve set out to do. Whether saving for a vacation, building an emergency fund, or making a major purchase, setting SMART goals ensures that your financial planning is both practical and aligned with your priorities. Remember, your goals should reflect what’s important to you and be flexible enough to adapt as your circumstances change.