This is probably the best time to note that I do NOT consider myself a financial expert by any means. I’m just a girl who loves to read about personal finance, loves to watch the Suze Orman show on Saturday night, and can’t get enough of checking my budget spreadsheet or updating my net worth.
When my husband and I met, we were both in debt. The story of how we eventually got out of debt is a long one, but the single most important thing we did to allow us to get out of debt was setting the goal. It was easy to complain about being in debt. But until we decided to face the truth, tally up the numbers and know what we were trying to accomplish, we were so overwhelmed with it that we wouldn’t face it, and it got worse before it got better. And the goal setting didn’t stop when we got out of debt. That’s when it really got fun! Because instead of our goals going into the “hole” of debt repayment, they started going towards building the life we really wanted.
To help the end goal not seem so scary, it was helpful to me to set SMART goals along the way.
S = Specific – the goal must be specific
M = Measurable – you should be able to quantify or measure your progress
A = Attainable – the goal should be something you can stretch for and reach
R = Relevant – it must be worthwhile to you
T = Timely – it must have a date for completion
To make this a little more fun, let’s say your end goal was to save $2,000 to take a trip to the beach (yes, please). Here's how I would make sure it was a SMART goal:
Specific: I need to save $2,000.
Measurable: I get paid every two weeks, so I need to set a dollar amount every two weeks that I can save.
Attainable: This amount is something within my reach. Although I might like to go on a $20,000 trip around the world, that's just not something I can do (right now!).
Relevant: I really would enjoy this vacation, and I’m willing to save for it.
Timely: I’d like to do it next year. Let's say 9 months from now.
So now you can say that your specific goal is to save $112 per paycheck, rather than I need to save $2000, which can seem overwhelming. You’re able to measure every two weeks how you’re doing on your goal. You know that the goal is attainable by not eating out a few times a week, or not buying that new outfit every few weeks. You keep it relevant by picturing yourself on the beach each week when you move that money over to savings. And you know that the time will come when you’ll be heading off on your trip, not worried about how much it costs because you’re paying in cash!