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S.M.A.R.T. Savings

S.M.A.R.T is a goal setting guide that has been widely used for years across various industries for a myriad of goal types. It is an acronym that you can use as your guide for setting up your financial goals. It stands for:


Specific (simple, sensible, significant).

Measurable (meaningful, motivating).

Achievable (agreed, attainable).

Relevant (reasonable, realistic and resourced, results-based).

Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).

The goal you set for yourself should include above 5 elements. We will dive deeper into what each of these mean below.

1. Specific

Your goal should be simple and specific, for you to efficiently focus your efforts on achieving it. It is also important that it be sensible and significant to you so that you feel motivated to achieve it.

To get started, think about the following questions to help you brainstorm:

What do I want to accomplish?

Why is this goal important?

Who is involved?

Which resources or limits are involved?

2. Measurable

It's important to have a quantifiable number associated with your goal so that you can track your progress and stay motivated. Assessing progress helps you to stay focused, meet your deadlines, and feel the excitement of getting closer to achieving your goal.

For this point, think about the following questions to help you set your goal:

How much?

How many?

How will I know when it is accomplished?

How long will it take me to accomplish?

3. Achievable

This is a very important point and where a lot of individuals fall down. Your goal needs to be realistic and attainable to be successful. It should challenge you but not so much so that it is impossible.

Think about the following questions to help you set your goal:

How can I accomplish this goal?

How realistic is the goal, based on all other factors?

4. Relevant

This is about ensuring that your goal is important to you. Think about what is important to you and ignore potential external influences. We all need support and assistance in achieving our goals, but it's important that you oversee your goals.

Think about the following questions to answer for a relevant goal:

Does this seem worthwhile?

Is this the right time?

Does this match my other needs?

Is it applicable in the current socio-economic environment?

5. Time-bound

Every goal needs a target date, so that you have a deadline to focus on and something to work toward. This part of the SMART goal criteria helps to prevent everyday tasks from taking priority over your longer-term goals.

A time-bound goal can answer these questions:

When?

What can I do six months from now?

What can I do six weeks from now?

What can I do today?

Here is an example for the S.M.A.R.T goal for someone setting up a personal finance goal. “I’m going to pay off my credit cards.”

  • Specific: “I am going to follow the 50-30-20 rule for budgeting (see our article about this here) and put 20% of my income every month towards paying off my credit card debt.”

  • Measurable: “My goal is to pay off my credit cards by January of 2024.”

  • Achievable: “I love socializing with my friends, rather than going to restaurants I will host potluck parties so cut down on my dining out.”

  • Relevant: “I want to be financially independent and relieve the stress of having debt so I can focus on the things in life I enjoy”

  • Time-bound: “I will check my budget every Friday before the weekend to make sure I am on track and so I know what my budget for the weekend is.”


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