S.M.A.R.T. Financial Goal Setting for 2015
As we enter the New Year, many of us have resolutions that we will try to keep. Whether your resolution is to get in shape by eating right and working out, take more personal time, travel more or to save more money for your retirement, setting goals will help increase the likelihood that you will fund success.
Goal setting is important to help you plan and succeed, with finances and just about any other facet of your life. Whether you have a young family and are planning to build your savings and prepare for years of education, or you are approaching retirement, the steps to setting your financial goals for 2015 are very much the same. Set S.M.A.R.T. goals to help you achieve your 2015 financial resolution.
S – SPECIFIC
Be SPECIFIC in the goals you set. A goal needs to be as specific as possible to achieve it. “Save money” or “lose weight” is far too general a goal. State exactly what your goal is and your timeline for achieving it. Set specific goals like “create an emergency fund in 2015” or “contribute more to a retirement fund this year” to help increase your likelihood of success.
M – MEASURABLE
Set measurable goals so you know when you have achieved it. If one of your financial goals for 2015 is creating an emergency fund, state the goal as “I want to create an emergency fund in 2015 that is equal to three months of our household expenses”.
A – ATTAINABLE
Set ATTAINABLE goals. High expectations are good when setting goals, but the goals you set must be attainable. You may want to contribute the maximum allowable amount of $18,000 to your employer sponsored 401(k) plan. For most people $18,000 annually or $1,500 monthly seems out of reach. However, when you break the goal down into daily intervals of $50, the goal seems much more attainable.
R – REALISTIC
Be REALISTIC with your financial goals. When setting your financial goals for 2015, have a realistic outcome in mind. For most people, it isn’t realistic to think that if you manage your money well in 2015 you will become a millionaire. However, it is realistic to believe that if you manage your money well in 2015 you may contribute the maximum to your 401(k) or set aside the emergency fund equal to three months of expenses.
T – TRACKABLE
Make sure your goals are TRACKABLE. The ability to track progress creates motivation to keep reaching toward your goal. By tracking the growth of your emergency fund or retirement savings in weekly or monthly increments, you will consistently revisit the goal(s) you set. Success breeds success. Finding success with these smaller intervals will lead you to success with your ultimate goal.
Be S.M.A.R.T. with the goals you set. To increase your odds of success, make sure your 2015 financial goals are Specific, Measurable, Attainable, Realistic and Trackable.