When you start looking over your personal finance situation, you usually have some objectives in mind. It can be a house own payment for a house, a new car, or a brand new Playstation 3. To fulfill them, you will need clear & definite goals. The SMART goal concept has been around since the 1960’s and has been used successfully by individuals and organizations to create effective goals. But what is a SMART goal and how could it help you?
The SMART Anacronym
1. Specific: Do you have a precise or specific outcome description with your objective?
2. Measurable: Do you have a reliable measurement system in place for your objective?
3. Achievable: Can you achieve your objective with a reasonable amount of effort?
4. Realistic: Do you have the necessary knowledge, authority and skill?
5. Time: Is there a finish and/or a start date clearly stated or defined?
Bad example: I want to be rich (duh! Who doesn’t!!)
Good example: I want to reach $150,000 net worth by 35 by investing $10,000 p.a.
What does it mean to you?
By setting yourself SMART goals you will ensure that you know where you want to go. More importantly, you will have higher chances of fulfilling your goal. How is it so? A SMART Goal lays a clear path for you to follow, and break it down to easy to chew pieces. It will enable you to set reachable milestones, which will help you realize you are making some progress toward your goal. Psychologically it will be a boost to your self-confidence. You know you are on a path to success, and you realize it every time you reach a new milestone.
For me, every new milestone deserves a reward. I usually treat myself to a nice piece of cake. You should always look forward to achieving your goals, and a piece of cake always makes the crossing of the finish line sweeter.