S.M.A.R.T. Goals Power You To Success

This article is part of our 12 Keys to Lasting Wealth Series – (Key 2: Know Where You’re Going).

In the previous post I explained why setting effective goals is key to financial success. Goals can mean the difference between finding yourself stuck in a financial rut or finding yourself exploding like an arrow toward your financial dreams.

How do we go about setting extremely effective goals? We make them S.M.A.R.T.

S pecific
M easurable
A uthentic
R ealistic
T ime Limited

Specific

Vague goals lack power. Yes they sound nice but they do nothing. To have power your goals must be specific.

It’s not enough to say, “My goal is to buy a new house.” Try this instead:

“My goal is to purchase a home located in a good school district within 30 miles of my job at a price between $300,000 to $350,000. I will save $45,000 for a down payment and purchase my home within 3 years.”

Now that’s specific. It offers a clear blueprint for success.

Resist, “My goal is to get my financial life in order.”

Instead try:

“By the end of this year I will have create a budget that I consistently follow, eliminate my $7,322 credit card debt, and save $2,000 in a savings account.”

It’s the detail that gives your goal life, meaning, and power.

Measurable

In order to ensure you’re moving closer to your goal you must have some way to measure your progress. You need mile markers on your road to success.

Are you doing OK, or do you need to kick it into high gear?

Let’s say your goal is to save $45,000 for a down payment to purchase a home in 3 years. Simply measure your progress by reviewing how much you’re putting away each month.

Are you saving the $1250 every month you’re going to need to reach your goal? If not you may have to eat at home more, go to fewer movies, or ditch that expensive club membership.

Measurable goals allow you to track your progress and adjust your efforts when needed.

Authentic

There are going to be rough times. There will be moments when you’ll want to give up, quit, and abandon your goals. This is exactly why your goals need to be authentic.

An authentic goal is one that aligns with your values It’s a goal that has meaning and will significantly change your life. It’s this authenticity that will allow you to motor through even in the toughest of times.

Let’s say you value your child’s education and want her to attend a great school that prepares her for college. The goal of saving for a new home located in a great school system suddenly has authenticity based on the value you place on education.

When times get tough or when you need to make tremendous sacrifices, the thought of your daughter getting a great education will help you continue to strive toward your goal of a new home.

See how different this is from the less than authentic goal of wanting to save for a new larger home, one that impresses your friends and signals that you have “arrived.”

When times get challenging the idea of a larger home to impress your friends and family may not carry you through or force you to make the necessary sacrifices.

Creating authentic goals requires you to carefully examine the motives behind them. Are the goals really going to improve your life and make the lives of your loved ones better, or are they means to ever larger status symbols?

Realistic

If your goal is to be a millionaire by the end of the year but you only make $50,000 annually, you may be a little bit unrealistic in your goal setting.

This is where it gets tricky. Your goal must be realistic, but it should also challenge you and cause you to break out of your comfort zone. Your goals should push you to the limit.

When I was running track in high school, I was continually challenged by my coaches to improve my time in the 200 meter dash. No, the coaches didn’t expect me to run an Olympic time which would have been totally unrealistic, but I was challenged to go for the school record. This would cause me to reach beyond my comfort zone, and it worked!

The take home lesson: Your goal cannot be totally out of the realm of possibility, but it should be extremely ambitious. THINK BIG.

So while it might not be realistic for someone earning $50,000 to make one million dollars at the end of a year, why not set the goal of making $200,000 by the end of the year, or how about accumulating 1 million by the end of 3 years? These are goals that might stretch someone to their limit but which are completely achievable. (And of course there would have to be an authentic reason why you’d want to do so).

Time Limited

“Goals are dreams with deadlines.” – Diana Scharf Hunt

Without a deadline a goal is simply a dream or vague desire. It remains something you’d “like” to achieve. Without a time frame your goal will be accomplished “someday,” but we all know that “someday” will never arrive.

A deadline forces you to take action. It provides you with a sense of urgency. Only by putting a deadline on our goals will we see them come true.

Are you ready to change your financial situation? What are your S.M.A.R.T. goals for the year? In the next post I’ll go over how to get started putting your S.M.A.R.T. goals into motion and begin building the life you want.

Tagged as: Goals