We believe setting goals is a vital practice in achieving your best self. Goals provide us with meaning, focus, and motivation to accomplish our greatest aspirations. They give us all something to work hard for and they force us to become better people in every aspect of our lives.
Setting goals aren’t as simple as writing down what you want. The process can be rigorous to some because many of us aren’t exactly sure what it is that we want or the steps we need to take to achieve what we want. There are simple principles that can be applied to goal setting and in this particular case financial goal setting. However, these processes can be applied to any part of your life that you wish to improve on!
There are lots of resources, templates, and downloads on how to set goals but for starters, we’re going to start with the acronym S.M.A.R.T. This is a commonly used way to set goals and what it stands for:
I love this principle because it can be easily applied to any goal you set because you have carefully established a goal and planned your steps wisely to achieve that goal. Sometimes it’s easy to set a goal without realizing that it’s not a goal, but just something you wish for. “I want $100,000” is not a goal. “I will have at least $100,000 by the end of 2016 by putting $8,333 every month in an investment account” is a goal. The difference between these two financial goals is clear: the latter is specific, measurable, attainable, realistic, and timely and the former is vague, immeasurable, and doesn’t have a time limit.
Once you set your goals, write them down somewhere you can see them. When you write down your goals and keep them somewhere you can see them often, it keeps you focused and reminds you of what you’re trying to work towards. This will also help you evaluate and reflect on those goals. Are you doing your best to work towards those goals? Did you achieve those goals quickly and realize you could push yourself harder? Take some time daily or weekly to revisit your goals to make sure you’re still focused. I like to set short-term, medium-term, and long-term goals by writing down weekly, monthly, one year, and five-year goals.
A Big Hairy Audacious Goal is my favorite type of goal to set. The acronym was coined by James Collins and Jerry Porras in their book Built to Last: Successful Habits of Visionary Companies. Even though the authors proposed this concept for companies, it can also be applied to your personal and financial goals. These goals are meant to sound a bit ridiculous to someone from the outside in, but if you have big dreams, write them down and go for it! These goals are meant to be compelling, motivating, and keep you focused on your long-term aspirations.
There are many benefits to goal setting. Setting financial goals gives you “long-term vision and short-term motivation.” By defining your financial goals you can focus and organize your financial resources so that you can make the most out of your life.
If you found this article helpful, be sure to check out “Finance, Food, and Fitness: What They Don’t Teach You in School” on our blog. And for more financial tips and free downloads be sure to subscribe to our newsletter!