Setting SMART Financial Goals
Have you ever set a financial goal with the best of intentions, only to find yourself derailed after a few months? If so, you're not alone. Just look at how many people start the New Year off with a brand-new gym membership, only to stop going after a few months.
I find that it is easier to start with one short-term financial goal. For example, your long-term goal may be to have $1 million saved for retirement account by age 65. But if you are in your 30s, well, that’s a long time away. It can be hard to stay motivated for decades. How about setting a shorter-term goal to maximize your 401(k) contributions over the next 12 months.
This type of thinking is based on the SMART goal method. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. By applying these metrics you can create a simple plan for successfully achieving your financial goals.
Let's use an example: I want to update my estate plan. That can seem daunting. So many decisions to make! Here's how to apply the SMART method:
Specific: I will update my estate plan, including having all assets titled properly, with the appropriate beneficiaries.
Measurable: Each month I will complete the following steps:
- Month 1: Decide on which attorney I will use. (This may involve asking my advisor for recommendations, or checking in with friends and colleagues.)
- Month 2: Schedule the appointment with attorney. (It may take several appointments, with calls in between. Schedule them all.)
- Month 3: Finalize all decisions based on options presented by the attorney. (This may be the toughest part...)
- Month 4: Receive and review documents. Sign the plan! (A must do - celebrate upon completion!.)
- Month 6: Follow through - retitle assets, name beneficiaries to reflect new plan. (The attorney usually provides a "funding memo", with instructions.
Achievable: I am busy, but the time frame is workable.
Relevant: Yes. This is crucial for my family's well being. A priority.
Time-Bound: I have resolved to achieve this goal in 6 months.
Now that you have identified your SMART goal, it's time to get started.
Discuss the SMART goal with your loved ones. Track your progress, celebrate your wins, and know that six months from now you will have peace of mind that your estate plan is up to date. You'll have proof that you can set and achieve your financial goals.
Congratulate yourself! Feel great about your progress.
But don’t stop now… set your next SMART financial goal. I'm here to help!
Shari Greco Reiches
Shari Greco Reiches is Co-Founder, Principal and Chief Growth Officer of Rappaport Reiches Capital Management. She is the architect of the firm's Maximize Your Return on Life Solution, which aligns clients' financial planning with their Core Values. She is a frequent speaker on financial planning and values, author of Maximize Your Return on Life - Invest Your Time and Money in What You Value Most and enjoys mentoring women in the wealth management profession. Please connect with Shari below. She loves to talk about investing, financial planning, and Barry Manilow.