How to Create Smart Financial Goals for the New Year

Setting realistic goals is key to achieving financial success. However, knowing which goals to prioritize and how to reach them can be difficult. Following through with the goals you set, can be even harder. How often have you set a goal with the best of intentions and then found yourself feeling defeated when you don’t quite stick to your plan? If this is you, know that you are not alone. This year, we are taking control of our finances rather than letting our finances control us. How do we do that? By starting with our big-picture vision, we call this our Infinite Heights goal and then create specific, smaller goals that help us get there.

We recommend using the tried-and-true SMART formula, the one you are probably already familiar with when creating your financial goals. The SMART formula stands for setting goals that are specific, measurable, achievable, relevant, and time-based.

Here’s how to apply the SMART formula to your financial goals:

Specific - What is it that you actually want to accomplish? Why is this important to you? How will this goal put you in a better financial situation? Be specific about what you are trying to achieve. Without a clear vision in mind, you may find yourself moving in the wrong direction.  

Here’s a tip: Create a vision board! Set it as your computer background or keep it somewhere in plain sight. When you glance over at the vision board you created, it will help keep you focused and excited about your goals!

Measurable - How will you measure or track your progress toward this goal? Quantifying your goal with clear numbers is a crucial step as it leaves you with no ambiguity about whether or not the desired outcome has been achieved.

Achievable - We can absolutely do anything we set our minds to, however, it's important to be realistic when setting goals for ourselves. If it doesn’t work on paper, it won’t work in real life. Setting impossible goals become discouraging rather than motivating. Instead, write down your Infinite Heights goal and break it down into smaller, more achievable milestones and take things one step at a time. Remember: it's a marathon, not a sprint! 

Relevant - Does this goal matter to you and does it help you reach your Infinite Heights goal? Setting financial goals that align with your values will keep you going because they support the ultimate goal: living your ideal life. Prioritize goals that will have the most impact on your life now and in the future.

Time-based – Create a timeline with specific dates for each step of your plan. We recommend listing out your short-term goals (any goal you want to achieve within 1-2 years), your mid-term goals (2-5 year timeframe), and your long-term goals (5+ years). Your timeline will play a major role in your saving and investing strategy.

Here’s a tip: Some people get hung up on this step because they feel like they have no idea what their future holds or how to plan for it- that’s OK! Your long-term goal might be as simple as having the financial freedom to not feel stressed about money.

In lieu of being in the midst of wedding planning, here’s an example of how to apply the SMART formula using one of my own financial goals:

Specific: My fiancé and I want to save $24,000 for our wedding in 1 year.

Measurable: We will each need to save $1,000/m to have $24,000 saved in 12 months’ time. We will check in monthly during our scheduled money dates to ensure we are on track.

Achievable: Can we afford to save an extra $1,000/m toward this goal? What sacrifices do we have to make each month in order to make this happen? Is this realistic?

Relevant: Does this goal align with our values and help us reach our big-picture goal? Sometimes this question can be tricky- Is this goal negatively impacting our other financial goals? Will we have to stop contributing to retirement or go into debt to reach this goal? 

Time-Based: We have 12 months to save $24,000 and will each keep $1,000/m in order to reach our goal on time.

Here’s a Tip: Treat your savings goals like a bill and set up automatic payments towards a savings account that is out of sight, out of mind! Don’t try to save whatever is left over at the end of the month, pay yourself first.

Being proactive with our finances begins with setting clear and SMART goals. SMART goals are important because they help you stay focused on what you want. They also help you remain motivated and give you a way to evaluate your progress, as well as create a plan of action.

Don’t feel like you have to do this alone- find an accountability partner! Share your goals with your partner, trusted friend, or your financial planner. We are here to provide support and help you manage complex goals and keep you on track. Connect with us to take the next step toward reaching your own infinite heights!

*The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.