How To Make SMART Financial Goals

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How To Make SMART Financial Goals

Last year was history making. Widespread and rapid shifts in how we interacted with the outside world touched every aspect of our lives. For many it was a challenging year financially with unemployment hitting the service, travel, and entertainment industries disproportionally harsher than other businesses.[1] But even if you didn’t lose your income the long-term ambiguity drove many to question how prepared they were financially showing in surges in personal saving rates.[2]

Whatever your 2020 looked like, you undoubtedly looked at your life and found areas that you would like to improve. Financial stability and preparedness are much like other facets of self-care and self-improvement in that it’s made easier if clear goals are in place.  The SMART goal method can be a helpful place to start when beginning to think about financial goal setting.[3] SMART is an acronym that stands for specific, measurable, achievable, realistic, and timely. [4]  If you find yourself wanting to create financial goals that are sustainable and achievable read on, and let’s create some financial goals worth pursuing for 2021.


The goal needs to be detailed. Instead of a goal like-save for a house down payment, try instead- save $3600 this year to my down payment fund. By having a specific goal, you can break it down into actionable steps. You can look at your income, budget, and upcoming expenses to see how to make this goal achievable. Is it feasible to save $300 a month from your salary? Are you wanting to create a side hustle to save the money? Are you earmarking a tax refund or bonus to make up the $3600? With a specific goal you can start creating a detailed plan with measurable, actionable steps.


A goal needs to be measurable so that you can determine if you have achieved it or not. With a goal like spend less on groceries, it is hard to tell if you had the success you wanted.  But if you have been tracking your expenses and you know that you have been spending $400 a month on food. You now can make a goal to reduce your grocery spending by 20% or by $80. Your goal now becomes concrete and therefore measurable.  If you did not achieve your goal, then reexam at the goal to see if it is realistic or attainable and what changes need to be made.


Goals become attainable when they do not stretch beyond an achievable point. Your attainable point needs to consider your current lifestyle and what spending adjustments that you may need to make and what resources are at your disposal.  While paying off $20,000 of debt in a year would be amazing, if your yearly salary is $40,000 that may be hard to achieve unless your living expenses are very low.  (if this applies to you, then by all means pay off all your debt.)  But if that isn’t attainable what is? Can you put a freeze on not adding additional debt in combination with a set payoff schedule? Remember that attainability doesn’t always mean fast. Though ideally having goals that can be accomplished in the short term is desired, some goals take longer than others.


Goals that are realistic get accomplished. By really evaluating your budget, spending, debt, income, and lifestyle, you can decide what is a realistic goal. Remember goals sometimes need to be modified because of unforeseen events (we are looking at you 2020). But it is better to modify a goal then to abandon it.  Be mindful that your goals are an important promise you have made to yourself. Even starting small like putting aside $50 a month to an emergency savings fund can add up by the end of the year. $600 that can go to unexpected expenses instead of having to use a credit card can help change your frame of mind. Small steps in time, push you towards achieving your bigger goals.


Goals need timelines. It is nearly impossible to achieve a goal without a time parameter. Also, time helps you to prioritize your goals. If you are wanting to start or expand your emergency fund, pay down credit card debt and buy a home, you need a timeline. By looking at your lifestyle and creating a timeline to accomplish your goals you can readily see if you are on track to reach your objective. If you are unable to achieve the goal maybe you need to modify it, the timeline, or your lifestyle to achieve your aim. Time is important consideration for financial goals, by creating urgency and direction for effort.

What more help with creating financial goals? Download our goal setting sheet- here.

If you’d like to work with us, Scarlet Oak Financial Services can be reached at 800.871.1219 or contact us here.


Advisory services offered through Capital Asset Advisory Services, LLC, a Registered Investment Advisor. This material has been prepared for informational purposes.