The great thing about goals is that we each get to set our own. There is no “magic” goal set to make us all happy. We are all individuals and we all have individual wants and desires. I don’t want a fishing boat, but perhaps you do. I want to travel, but maybe you want to make some home improvements and stay there and enjoy them. Since we are Americans, we have the freedom to choose how we use our money.
The thing about goals is that they have to be SMART – Specific, Measureable, Achievable, Relevant, and Timely. Let’s tackle each of these one by one.
Specific – The goal to just save money will never be achieved. Sure you might put a little away, but will it truly be enough to purchase what you want? Let’s say your goal is to buy a new flat screen TV before the Super Bowl. Your goal would start out with “Purchase a flat screen TV” as opposed to save money and hope there is enough in there for the tv.
Measurable – How much is the TV? Do your homework. Let’s say you want a pretty big flat screen so you need $1200.00. Now your goal has just changed to “Purchase a new flat screen TV for $1200”.
Achievable – Do you have enough discretionary income to even consider buying a new TV? Perhaps your income will only allow you to buy a $600 TV. Or maybe your time line isn’t long enough. You can change your goal to be “Purchase a new flat screen TV for $1200 in 12 months”. What you don’t want to do is set yourself up for failure. Make sure the goal is within your reach. This doesn’t mean setting low goals, it just means that the goal is attainable, but it will take a lot of hard work to accomplish. There is nothing wrong with setting a goal that makes you sweat a little.
Relevant – The goal needs to be something that will enhance your life and the lives of your family members. If it’s not, you won’t be motivated to achieve it. If you are married and or have a family, it has to be relevant to all of them as well, or they won’t care if you achieve your goal or not. This is where compromise comes into the picture. If you will back others and help them achieve their goals, they will be more likely to assist you in reaching yours even if it isn’t relevant to them.
Timely – You have to put a time frame on the goal, or it will just continue to sit out there, never being achieved. As humans, we are usually willing to put off until tomorrow what should be accomplished today. A time frame will also allow you to take the number of months available until the funds are needed, and divide it by the dollar amount needed to get the number of dollars you need to save each month in order achieve the goal. You can then even divide each month by the number of paychecks you receive each month so you know what to save each payday. These baby steps make the goal seem so much more attainable. What sounds better, saving $100 each month, or $25 a week?
Let me just share with you that this is the step that everyone wants to skip! I have seen it time and time again. Goal setting takes time and effort. Setting goals is the platform for your successful money management plan. Goals help you decide where to spend your money. Goals will help you decide how to invest. Goals are going to help you stay motivated and on track.