When you reach out to a financial coach for help with your money, you’ll be asked about your financial goals. While you might know that you want to save extra money or pay off credit card debt, these general ideas aren’t enough to craft an action plan or path forward. Your coach will push you to create SMART financial goals to focus your time and energy and get the most out of financial coaching.
Why SMART goals?
Having a goal that’s vague will not set you on a path for success. This is especially true when it comes to your money. SMART goals offer you the opportunity to consider what’s most important to you and give you a road map to achieving them. Creating SMART goals to share with a financial coach will make the path to success clear. SMART goals allow your coach to be an accountability partner and check in to see if you are meeting milestones necessary to achieve your goals.
What does SMART stand for?
S – Specific. Think of something you want. Knowing you want to save money isn’t enough. Specify exactly what you want. This generally includes answering the who, what, when, which, and or why questions. For example, (answering the “who” and “what”) you want to save $500—a specific amount of money.
M—Measurable. Think of a way to measure progress toward your goal. For example, I want to save $100 of the $500 in the next month.
A—Attainable. Think of something that’s realistic for you. To reach success, you’ll need to consider both how you can accomplish your goal and any roadblocks that might prevent success. For example, I want to save $100 of the $500 dollars in the next month and I know I can set aside at least $25 a week and still take care of my bills.
R—Relevant. Think of goals that are important to you, that you’ll be responsible for, and that are significant for your current situation. For example, I want to save this money to build an emergency cushion for my family; as a single parent, it’s important to have some savings to ensure we don’t go deeper into debt if an unexpected expense occurs.
T—Time-bound. Think of a target date to reach your goal to give yourself a deadline to work toward. For example, I want to save $500 for emergency savings no later than 6 months from today.
Putting it all together
Using the above example, we’ve taken the general idea of saving money and created a SMART financial goal: I want to save $500 for emergency savings that will support my family in a time of need. I will have $500 saved no later than 6 months from today. Within the next month, I will set aside at least $25 dollars each week so that I stay on target to reach my goal.
By using SMART goals, you’ll have realistic, time-bound goals that both you and your coach can focus and work toward during your financial coaching sessions. At each milestone, you can check-in, evaluate your progress, and ensure you are on track. SMART goals will encourage you to make smart financial decisions and reduce stress, ease anxiety, and see real progress as you begin to master your finances.