You're probably familiar with setting goals in all areas of your life. They tend to revolve around work, health, and personal finance.

But they also tend to be abandoned almost as quickly as they're made.

Setting finance goals is a great way to prepare for your financial future, but how can you give yourself the best shot at reaching them?

By making them SMART financial goals!

What Are SMART Goals?

SMART is an acronym that stands for Specific, Measurable, Achievable, Relevant, and Time-based.

It's a popular framework for establishing your goals in a way that makes you more likely to achieve them.

Here's how it works:

Your Goals Should Be Specific

Goals like "be healthier" or "save more money" are too general.

There's too much wiggle-room and not enough specificity to make them effective.

To make a goal like "save more money" into a more specific goal you'll turn it into "I will save $5,000 in my emergency fund by the end of the year."

Your Goals Need to Be Measurable

Whether you're tracking the number of dollars saved or the number of days you pack a lunch, you want to make sure your financial goals can be measured.

Not only is it important to have a measurable goal so you know when you've actually hit it, but being able to track your progress will give you extra motivation as you pursue it.

Make Sure It's an Achievable Goal

While you want to make your financial goals big and a bit of a challenge, you also want to be careful to keep them realistic.

If you set your goals too high at the start you're giving yourself an excuse to fail.

Your financial situation will dictate what's realistic or not. 

To make sure you're setting an attainable goal take a look at your income and expenses to see how much you can afford to save.

Setting a short-term goal of saving $50,000 for a house down payment this year isn't realistic if you're only making $48,000 a year.

But expanding out your time frame and making it a long-term financial goal you'll tackle over the next several years will turn it into an attainable one.

Or you can adjust your larger or longer-term goals into smaller goals you can tackle along the way.

Is Your Goal Relevant?

When you think about what you want your life to look like in 5 or 10 years, is this goal relevant?

Assuming you want to achieve financial security and freedom, absolutely saving $5,000 would be relevant.

If your goal is to save up for a beach house, but you hate the sand, it may not be a goal you can stick with.

Relevancy is important because it's what will keep you motivated.

That's not to say you can't make it a goal to buy a beach house, but if you start to lose the desire after a while, you're going to give up.

Goals Need to Be Time-Bound

Finally, a SMART goal needs to have a set time frame.

• Is this a short-term goal or a long-term goal?

• What period of time are you giving yourself to hit it?

• Is there a time constraint like an introductory APR or due date involved?

Having a deadline will keep you focused and on course. It fuels the need to take action.

Why You Should Set Financial Goals

Being intentional with your money is the cornerstone of financial success.

Setting goals for your money is a great way to gain awareness of your spending habits and become intentional with your decisions.

As you clarify your goals you'll gain a better understanding of your financial picture so you can start to define your priorities.

Being crystal clear on your priorities will help you stick with your goals even when things get tough.

You may have set goals in the past only to struggle with momentum and willpower. Instead of throwing in the towel altogether, try setting SMART guidelines for personal financial goals.

Examples of SMART Money Goals

Goal: Pay Off Credit Card Debt

"Pay off debt" is a worthwhile goal, but it's not a SMART one.

Let's SMARTen it up: "I will pay off $10,000 of my debt by Christmas."

Awesome!

Let's double-check:

• Is it specific? Yep. You know how much and by when.

• Is it measurable? Sure is. You can easily track how much you're paying off as well as know when you hit your target.

• Is it achievable? This depends on your income and other expenses, but for this example, I'll say yes.

• Is it relevant? If you want to be debt-free it is!

• Is it time-bound? Yep. You've set yourself a Christmas deadline.

Goal: Save for Retirement

Again, "save for retirement" is a great idea, but doesn't have much clarity to it.

Let's try "I will contribute 10% of my paycheck to my 401k this year."

• Is it specific? Yes. You've got a clear plan of action.

• Is it measurable? Sure. You can easily specify percentage contributions with your employer.

• Is it achievable? If you're not saving anything and living paycheck to paycheck it may not seem like it, but you can start gradually and work your way up. So, yes.

• Is it relevant? Assuming you want to retire someday, definitely.

• Is it time-bound? Yep. You can either start immediately or set a target date to hit that 10% contribution level.

Some Smart Financial Goals to Target

If you know you want to set some money goals but aren't sure where to start, here are some ideas:

Savings Goal Examples:

Save More Money

• I will automatically transfer $50 from my checking account to my savings account every payday.

• I will try a money-saving challenge this month to make more intentional financial decisions.

Earn More Money

• I will declutter my home and sell what we don't need online before the end of the month.

• I will start a side-hustle that generates some passive income and increases my cash flow by the end of the year.

Spend Less Money

• I will tackle a no-spend challenge this month.

• We will only spend $100 on eating out this month.

• Starting today, I will start using a spending tracker to gain awareness into my expenses.

Save Money for Retirement

• I will contribute 10% of my paycheck to my 401k by the end of the year.

• I will save $5,000 into my retirement savings account by the end of this year.

Debt Goal Examples:

Pay Off Student Loans

• I will round up my student loan debt payment to the nearest $100 every month.

• I will cut my expenses and pay off an extra $5000 of student loan debt this year.

Pay Off Credit Card Debt

• I will use the debt avalanche method to pay off my highest interest credit card debts by the end of the year.

• I will use the debt snowball method to pay off my credit card with the lowest balance by the end of next month.

• I will sell my old gadgets on Decluttr by the end of the month and put that money toward debt.

General Financial Goals:

Improve Your Financial Literacy

• I will read one personal finance book every month this year.

• I will search YouTube for resources to help me understand compound interest and how it affects my financial plan.

• I will read, watch, or listen to financial experts have money conversations every week for a year and then search for additional resources to increase my financial literacy.

Take Control of Your Money

• I will sit down today and make a monthly budget that prioritizes my future money goals.

• I will set up automatic deposits into my emergency savings and sinking funds by the end of the week.

• This afternoon I will research apps for goal tracking and choose one that will help me stay accountable.

• I will research budgeting methods this week and choose one to try.

Improve Your Credit Score

• I will pay all of my bills on time and pay extra this month to reduce my debt-to-credit ratio.

• I will pay my credit card balance in full every week to keep my usage low.

• I will call my credit card company tomorrow to ask for a lower interest rate.

Plan for the Future

• I will schedule an appointment next week with a financial advisor to discuss financial planning and saving for retirement.

• I will schedule an appointment next week with an accountant to ensure I'm getting the proper tax advice to optimize my finances.

• I will transfer all extra money I receive this year into an investment account to help grow my net worth.

• I will sign up with Personal Capital today to start tracking my net worth and keep track of my assets and liabilities.

Start Investing

• I will call next week to schedule an appointment with an investment adviser to discuss investment strategies.

• I will open an account and set up automatic contributions with M1 Finance today.

• I will open a Digit account this week to invest money automatically.

Examples of Short-Term Goals:

• I will start an emergency fund with $500 this month

• I will have an emergency fund with one month's worth of living expenses by the end of the year.

Mid-Term Goal Examples:

• I will get an associate degree over the next 2 years to help advance my career goal.

• I will get a part-time job to help me pay off my debt in the next 2 years.

Long Term Goal Examples:

• I will increase my net worth to $1,000,000 by the time I'm 50.

• I will save $250,000 over the next 10 years to buy a house in cash.

• I will save $500 every month into a tax-advantaged account for my kid's college education.

Final Thoughts

Setting money goals in itself is a sign that you're on the right track. 

Smart financial management, thinking about, and planning for your future is how you recognize your priorities and start living the life you want.

Whether it's paying off credit card debt or saving for the future, simply recognizing your personal financial goals is the first step to achieving them.

By taking your goals a step farther and making them SMART goals you're setting yourself up for success.

Whether you're setting short-term financial goals or long-term financial goals, using the SMART framework will help you achieve them.