Setting SMART Budget Goals
Are you setting SMART budget goals? What do you want your financial future to look like? Most likely you want financial independence, but how do you get there? You get there by setting realistic budget goals that are specific, measurable, attainable, relevant, and time-based.
Setting SMART Budget Goals: Looking Down The Road
Again, what do you want your financial to look like? Allow yourself time to really think about this. You will most likely come up with some small thing that you would like to achieve like paying off that doctor bill or credit card. Now, think bigger. What if you could be completely debt free? Now think even bigger and farther into the future. Would you like retire early and move to Florida or travel the world? All It takes is setting SMART budget goals.
Make a list of your short and long-term financial goals. Some of the short-term goals might be a longer-term goal depending on the amount of debt you have in that category. They might look something like this:
Short Term
- save for emergency fund
- pay off doctor bills
- pay off credit cards
- Pay off student loans
Long Term
- save for rainy day fund (3-6 months of household expenses)
- invest for retirement
- pay off house
- save for child’s college
- Retire Early
- Travel
Now think about your values. Your short and long-term goals should align with your values. They should bring you closer to the people and things that you value most in life. This is one of your golden tickets to happiness. Keep your long-term and short-term goal list as well as your value list where you can look at it often. A good place to put then might be the refrigerator or your bathroom mirror. Some of your values might look like this:
My Values
- spend time with family and friends
- meditate and worship
- debt freedom
- making for time for yourself
Setting SMART Budget Goals: Achieving Success
Remember, a goal without a plan is just a wish. Achieving success with your financial goals requires the right planning so that your action will get you where you want to go. One of the most important and the first step that you need to do if you want to be debt free is to have an emergency fund. Here are Dave Ramsey’s baby steps if you’re interested. https://www.ramseysolutions.com/dave-ramsey-7-baby-steps. Let’s use saving $1000.00 for an emergency fund as our example as we set our first SMART goal.
Setting SMART Budget Goals: S.M.A.R.T.
Setting SMART Budget Goals: Your Goal Must Be Specific
Your goal needs to be specific. Knowing exactly what your goal is will give you clear picture of what you are aiming for. Your goal should be simple and sensible. Your goal should not be to save a million dollars for your emergency fund by tomorrow. This is too complicated for you to complete by tomorrow and it is certainly not sensible. Your goal should also be significant to you. Saving for an emergency fund should be important to you if you don’t have one.
Setting SMART Budget Goals: Your Goal Must Be Measurable
Having a measurable goal gives it more meaning and helps you see your progress. It will help you stay motivated when you know exactly what you are working toward. You have made your goal of saving for an emergency fund measurable by setting that dollar amount of $ 1000.00.
Setting SMART Budget Goals: Your Goal Must Be Attainable
You need to be able to reach your goal. Setting unrealistic goals can be a lesson in frustration and lead to failure. Setting attainable goals will allow you to achieve the success that you need by motivating you to keep moving forward to your next goal. The goal of $1000.00 for your starter emergency fund is certainly attainable.
Setting SMART Budget Goals: Your Goal Must Be Relevant
Ideally, your goals and routines should align and center around your short-term and long-goals as well as your values. Want to read more about values? Simple Living: 7 Steps To Start Living Your Best Life. Setting your goals to bring you closer to the people and things that you value most in life is one of your tickets to happiness. This part should be a given but is sometimes overlooked. The example of saving for our emergency fund is relevant to our values and goal of debt freedom.
Setting SMART Budget Goals: Your Goals Must Be Time-Based
Your goal needs to have a time frame. Giving your goal a time limit will create a sense of urgency and motivation to prioritize and complete that goal. For example, if your goal is to save the $1000.00 for your emergency fund in 5 months, then you need to save $200.00 each month in order to reach that goal. Setting a time limit lets you know where the finish line is for your goal. It also allows you to see your progress as well as how much time you have left to reach that goal.
I am living proof that you can reach all of your debt freedom goals by using the SMART goal framework with Dave Ramsey’s 7 baby steps. I am not paid by Dave Ramsey to promote his baby steps, but I will shout it from the rooftops to anyone who will listen because I know it works, even without buying the program. I would love to do the program just for the fun of it one day because I believe in it so much. Mabey I might be able to encourage someone else.
