SMART money goals

Training 55 minutesfinancial goals

You are 35, a primary school teacher. Every January you promise to "save more", and by March it is forgotten. This year your parents across the ocean are waiting for your visit.

Training goal: Set a goal you can actually reach

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Situation

1. How do you write the goal in your phone notes?

"Save more this year than last year"
"Trip to my parents: $2,200 by December 1"
"Become financially free"

2. After all bills you have $350 left each month. How much goes to the trip?

All $350 every month to get there faster
$200 a month, the rest for life
Whatever is left at month end

3. How do you stop the trip money from being spent by accident?

Auto transfer to a "Trip" account
Keep it in your head, you are disciplined
Withdraw cash and keep it in an envelope

4. May. A washing machine repair ate $180, and this month’s trip transfer will not happen.

Give up, it is not working anyway
Take $200 from the trip savings
Skip one month, add $35 a month through November

What you will learn

SMART: specific, measurable, achievable, relevant, time-bound
An amount and a date give you a monthly step
An auto transfer to a separate account beats willpower

Your real-life step

Write one goal as "what, how much, by when". Divide the sum by the months left and set up an auto transfer.

Questions and answers

How do I set financial goals?

Use SMART: a specific goal, an exact amount, a realistic monthly contribution, personal relevance and a deadline. Then divide the sum by the months.

What are examples of financial goals?

Short term: an emergency fund, a vacation, clearing a credit card. Long term: a home down payment, kids’ education, retirement.

What does SMART stand for in finance?

Specific, Measurable, Achievable, Relevant and Time-bound. A goal with all five is far easier to reach.

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Numbers are illustrative. A game, not financial advice.