Eat healthier, get more exercise and save more money all tied as most popular resolutions of 2018, according to statista.com. This is not a surprise. These are all very popular goals every year. Saving money is an important skill that you need to learn for yourself. So, let’s apply the acronym of S.M.A.R.T. to reaching your financial goals.
- First, the goal needs to be Specific. Save more money is not a specific goal. You need to set a goal of a number you want to achieve this year. Do you want to only save money for short-term needs? Or are you looking to save for retirement? Save for college? Could you pay off debt that would help you save more in future years? The purpose for saving and the amount of saving is a more specific goal.
- Second, the goal should be Measurable. Savings goals are easy to measure once they are specific. Measure it every month by writing it down or recording it on your computer. Open a savings account just for this amount.
- Next, the goal is Actionable. This is the step where you will break it down into smaller chunks. If you want to save $1,000 for the year, you will save $85 every month. Or, if you get paid twice a month, $42 every paycheck does the trick. What are the action steps you will take to reach this goal each month? Figure out what you can do or not do to save this money every month. Cooking more meals at home, less coffee stops, and cutting back on purchases are great ways to spend less.
- Fourth, the goal is Realistic. Once your goal is broken down, is it a realistic goal for you? Talk to your partner and make sure that you both want to work on this goal. Look at this goal and make sure that it is realistic but also challenging. Could you round up and save $100 every month? Then, at the end of the year, you would have $1,200 and could use that extra $200 somewhere else. Goals help you focus and you can achieve great things by stretching yourself.
- Fifth, the goal is Timed. A time limit is crucial to setting and achieving goals. But, don’t give up too soon. If something comes up and you only save $50 one month, don’t give up. Try again the next month. You are still working towards your goal.
Now, is the time to reassess your goals. New Year’s Resolutions are often too vague to actually be a goal. So, it’s time to take your resolution, reassess and change it into a S.M.A.R.T. goal that you can actually achieve. Good luck this year.
Please contact me to set up a budgeting phone call and get your finances in order this year.