Why Now is the Right Time to Set SMART Financial Goals

0

April was Financial Literacy Month, and while the month has passed, it’s never too late to start being intentional about your finances.

Financial literacy is the ability to understand and use various financial skills like saving, budgeting, and investing. These skills are necessary when trying to achieve financial independence and financial well-being. 

“If you fail to plan, you are planning to fail.”

Benjamin Franklin 

The above quote from Benjamin Franklin applies to many things in life, but when applied to our finances, our failure to plan can be costly in the long run. Although we can never be fully prepared for things like a pandemic, we did, however, learn that planning ahead can help us weather the storm.

When we find ourselves in a financial shock, like most people experienced during the pandemic, and some experience every month, planning ahead buys us time and prevents us from making decisions in moments of emotional upheaval. You’ve probably heard the phrase “do not make important decisions in times of desperation.” It’s important to always remember that. 

Setting financial goals can help you clarify and plan for your goals, whatever they are. If you’re unsure of how to set measurable goals, the simple steps below can help you get started.

How to Set Financial Goals

1. Define Your Goals

Before you begin, it is important to define what your goals are and write them down. Meaning, is it a short-term (0-3yrs) or a long-term goal (3-5yrs)? Does this goal require resources from others, or is this an individual goal? The answers to these questions will help you clarify exactly what the goal is and how to achieve it.

2. Create a Plan

Next, use the SMART goal to create a plan.

S = Specific

Be very specific and clear about your goal here. What do you want to achieve? Why do you want to achieve it? What will it take to achieve it? 

M = Measurable

You’ll want to quantify your goal to ensure that you know what you’re aiming for. This is where you answer the “How.” If your goal is to pay off a credit card faster, determine how much you owe, your monthly payments, and how much extra you can put toward it for a faster payoff. You may also want to commit to not putting any extra charges on the card.

A = Achievable

Is this goal achievable for you and your current financial situation? Set actionable steps that will help you achieve your goals. If you’re working towards an emergency fund or trying to pay off a car or credit card, determine how much extra you’ll need to set aside each month and how you plan to do it. Remember that small but consistent steps will lead to success.

R = Realistic

Create goals that are realistic for you. The easiest way to feel defeated is to set your expectations too high and beyond your means. Remember that even small but consistent steps can yield the results you want at the end.

T = Time Horizon

Put a time frame on your goal. When will you meet your goals? Will it take 3, 6 or twenty months to achieve your goal?

Financial Goal Example

I want to build an emergency fund for three months’ worth of expenses within the next year. To achieve this, I will cut back on spending by eliminating cable and opting for Sling or Roku. I will also cut back on eating out and instead fix my own lunch and grab coffee from home. By achieving this goal, I’ll be able to save (blank) and be better prepared to absorb unexpected financial shocks that are almost always inevitable.

Setting a goal is a great way to add purpose to every action you take. As you create your plan, be sure to place your written plan somewhere you can see it, and be sure to check your progress as you go along, this can give you the momentum you need to keep going. Additionally, having a written plan outlined can help you think twice about making any other big purchases that aren’t fully planned out.

Do you already create financial goals for yourself and your family? Share your tips with us in the comments!

Previous articleThe Columbia Fireflies Neon Kids Club of 2022
Next articleGuide to Splash Pads, Pools & Water Fun Around Columbia
Tania was born in West Palm Beach, Florida. Over the years she has lived in Africa, and Texas before moving to Columbia, SC in 2014. She met her husband Roger who is a local pharmacist and a small business owner and found a reason to stay in Columbia. She is mom to Darniel (15), Elton (4), and auntie to Jaylon (8). Tania has a passion for helping people understand their current financial picture so they can live better now while planning for their future. She takes any opportunity she can to educate people on financial literacy topics which is why she has been featured on CNBC, Yahoo Finance, and other financial press. After years of working for some of the big money management firms, she decided to take a leap of faith to start her own financial planning and wealth management firm. Tania loves to serve others and currently volunteers for a couple of nonprofits that support economic empowerment. Tania and her family enjoy the outdoors and mini-vacations. 

LEAVE A REPLY

Please enter your comment!
Please enter your name here