By: Tori Berube, MFF Director of Marketing & Outreach
With the start of the new year, many people reflect on the past year and take the time to set personal goals, including improving their financial health, for the year. Over the past few weeks, we have enjoyed reading what financial goals Americans are setting in 2021. We encourage you to read some great, idea-filled articles from Bankrate, WalletHub, and US News.
What personal finance goals have you set for yourself in 2021? Reaching your goals is possible when they are S.M.A.R.T. – Specific, Measurable, Achievable, Relevant, and Time-bound.
Here’s what you need to know about each component of S.M.A.R.T. goal-setting:
Specific – A goal should clearly describe what you want to achieve, as well as why you want to achieve this goal. You should use words that are clear, so rather than saying I want to buy a car, explain what type of car including the brand, make, year, mileage, color, and accessories you want. The more specific the better chance you will reach your goal.
Measurable – The goal should also include how you will measure progress toward the goal, and how you will know that you have achieved each step along the way. Let’s stay with the car example. You need to include when you plan to buy the car and how much you will be setting aside or saving each month towards the purchase. This way, you can see if you are on track and can measure how much you still need before you can purchase your dream car.
Achievable – The goal needs to be achievable or attainable, so you need to make sure that this purchase fits into your lifestyle and your budget. Include the resources needed to complete each step in the process. For example, you might only be able to save $100 each month for the first six months, and then you might be able to increase that amount so you can reach your saving goal sooner.
Relevant – The goal needs to be important to you. Describe what you will gain from achieving the goal, including whether it is worthwhile. A goal needs to have value for you if you are going to commit time, money, and other resources towards reaching the goal. Identify if this goal will save you time or money in the future, and if it will bring you other things such as satisfaction, happiness, or the ability to do things you currently are not able to do.
Time-bound – A goal needs to have a completion date and timeline for each action step in the process toward achieving the goal. If you can measure progress each week or month where you are towards your goal, you are more likely to achieve the results. Setting up a realistic timeline is important because if the timeline is too short and you cannot achieve the results, you may be frustrated. If the timeline is too long, you may forget to check in and measure your progress.
Evaluate your goal at least monthly (weekly would be better) to make sure you are still on track. Keep a progress report in a spreadsheet or in a journal. If your goal and progress are written down and visible to you, you are more likely to reach your goal as it will help you stay focused and motivated to see results. Another helpful tip to keep you on track – and accountable – is to share your goal with a friend or family member.
If something happens that puts you off your original track, it’s okay! Re-evaluate and revise your goals. Goals should be clear enough to keep you on track, and flexible enough so you can make adjustments or changes when unexpected events occur.
Our S.M.A.R.T. Goals_MFF worksheet will get you started with documenting your goals. Good Luck!
A Journey to Personal Financial Success
Standards of Financial Literacy (SFL), MFF’s signature program, supports the concept of personal financial freedom by giving participants of all ages the insight to set goals, track net worth and apply acquired knowledge. This online, self-paced program is ideal for individuals and groups alike.
Upon successful completion of SFL’s six-module course, participants become an MFF Fellow. Becoming an MFF Fellow is the ticket to access additional MFF courses and opportunities for mentoring, networking, internships and hands-on projects. These are the opportunities which allow MFF Fellows to continue their journey to personal financial success.
To learn more about this exciting program, click here.