The advantages of setting up financial goals are the definition of specific action steps to work towards, the ability to measure the progress over time and the effectiveness of helping to reach your targets and dreams. In order to set proper objectives the SMART system becomes key to success.
So, what are SMART financial goals?
The SMART goal setting transforms imprecise objectives into concrete and actionable goals. It’s about aiming for crystal clear milestones like “I will save 5,000 SEK or a summer vacation with my friends this year” rather than stating “I want to go on vacation this summer”. SMART stands for “Specific, Measurable, Achievable, Realistic and Time-Based”.
Specific
You won’t be able to focus your efforts or feel fully driven to reach your objective unless it is clear and explicit. Consider this step as the mission statement. When writing your financial goal you can take into account the five “W’s”: What do I want to accomplish? Who is involved? Why is this important? When do I want to obtain it? Which are my obstacles or prerequisites?
Measurable
It’s critical to set measurable goals so you can track your progress and stay motivated. Assessing your progress will help you stay focused, fulfill your deadlines, and experience the thrill of coming closer to obtaining your goal.
Achievable
To be effective, your goal should also be attainable. It should push your abilities while still being achievable. You might be able to find previously overlooked opportunities or resources that can help you get closer to your goal if you set an achievable target. Take into consideration how you’ll achieve the goal and whether you have the necessary resources or tools.
Realistic
To be realistic, you must concentrate on something that is appropriate for your current financial condition. Take time to consider what it will take to achieve this goal, as well as whether you have set the bar too high.
Time-based
Every goal should have a time frame with a deadline date so that you have something to aim toward and to focus on. This part of the SMART goal setting keeps your daily duties from taking precedence over your long-term objectives.
Are you soon starting to set up your SMART financial goals?
