(DailyChive.com) – As Americans, we spend. We’re a nation of debt and debtors. In fact, a CNBC report showed that GOBankingRates’ 2019 study found that it averaged $164 dollars a day for each person in the USA. While this included both essential purchases and non-essential purchases, it is still an average of $59,860 a year. The generational averages ranged from $92/day for Gen Z to $208/day for millennials.
By incorporating S.M.A.R.T. financial goals, households can rein in that spending and get on a path to a better future of savings. Not sure what S.M.A.R.T. financial planning is? Curious as to how it can benefit your household? Read on to learn what each part of the S.M.A.R.T. goal system is, an example of a completed S.M.A.R.T. goal, and see how it could help you reach your financial dream.
What Are S.M.A.R.T. Financial Goals?
S.M.A.R.T. financial goals are those that are Specific, Measurable, Attainable, Realistic, and Timely.
Specific – when making your financial goal, you need to be specific on what is to be done. By narrowing it down and not being vague, you’re creating a goal that can be more achievable.
Measurable – your goal must be able to be measured or quantified. By assessing measurement you’ll know where you are on the goal timeline and you’ll understand when you’ve achieved the goal.
Attainable – making the goal attainable is pertinent to achieving the goal. Lofty goals that are unreasonable won’t help you. Smaller steps make for a more attainable goal. Keep your expectations in check, make small step goals to that end-result, and it will be a S.M.A.R.T. goal.
Realistic – your goal must be realistic. For example, saying you’ll pay $500 a month but not change anything in your behavior or life when you couldn’t make $400 payments is not a realistic goal. You need to address the changes you’ll make, ones that are reasonable, and put them into action.
Timely – the financial goal must have a time frame and not just “sometime in the future”. By creating a deadline, you’re more apt to follow through and work toward it. For best results, also put any step-goals that you list when you get to the attainable section into a timeline as well. This way, instead of one big looming deadline, you have shorter, smaller deadlines that work you toward the goal.
S.M.A.R.T. Financial Goal Example
One example of a S.M.A.R.T. financial goal is paying off a loan.
Specific goal – pay off the loan in full.
Measurable goal – pay off $1,000 loan in full.
Attainable goal – paying $200 a month to pay off $1,000 loan in full.
Realistic goal – to pay off this loan, I will not go for after-hours drinks post workday with my coworkers and will put that money toward the loan payment.
Timely goal – by paying $200/mo toward the loan I will pay this in 5 months.
S.M.A.R.T. financial goal: I will be paying off $1,000 loan in five months by paying $200/mo, achieved by taking the after-hours drinks money and applying it toward the loan.
Conclusion
Many people file for bankruptcy when there is too much debt instead of working toward a solution. It may feel untenable and hopeless. However, bankruptcy, while an option, should always be saved for the very last resort after exhausting all other remedies, as it stays on your credit rating report up to 10 years and can make it difficult to finance items or even rent things that are needed.
By choosing S.M.A.R.T. financial goals you’re able to see definitive results in a quantitative method designed to help you and your household get to a better spot. Financial planning can seem overwhelming, but with actionable goals and a positive attitude, you can turn it around. The S.M.A.R.T. financial goal planning steps can work for all aspects of your financial life.
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