When I began tracking my spending, I realized every month I gave my money to the bank, to malls, car dealerships, restaurants, hair salons, and nail salons but never to myself. This means I thought places like Target, Chipotle, Fashion Nova, and Starbucks needed my money more than I did. I needed to make it a goal that every time I got paid, I would pay myself first.
I had to make this a goal, act and be smart about it. I took the following three steps:
Step 1: Establish short-term and long-term goals
Short-term goals can be accomplished in less than a year or 12 months. A long-term goal takes more than a year or 12 months to accomplish. An example of a short-term goal would pay off a credit card balance. An example of a long-term goal would be buying a house. It is good to establish both types of goals so that you can celebrate little wins on your way toward celebrating the big wins.
Step 2: Write all the goals down
Simply thinking about a goal or telling someone is not enough. The goals are not real until you can see and read them. When I negotiate deals, I know it is not final until I see them in black & white, which entails having the deal written out in black ink on a white sheet of paper. Even if it is just regarding grass cutting, I need to see it in writing. I hold myself to that same standard.
Step 3: Make it a SMART goal
As a student, I was taught to use the acronym SMART when setting goals. I determined what I was willing to start and made a commitment to get it done despite any obstacles then I wrote it down and made it a SMART.
S.M.A.R.T. stands for:
Specific (simple, sensible, significant).
Measurable (meaningful, motivating).
Achievable (agreed, attainable).
Realistic (reasonable, realistic, results-based).
Timely (time-based, time-limited, timely, time-sensitive).
How to Use SMART
Specific
A specific goal should address questions such as:
What do I want to accomplish?
Why is this goal important?
Who is involved?
Where is it located?
Which resources or limits are involved?
Specific Example
I want to pay off my $12,000 in credit card balances to invest more money into my retirement savings so that I can become financially free.
Measurable
A measurable goal should address questions such as:
How much?
How many?
How will I know when it is accomplished?
Measurable Example
I will pay $500 per month towards my credit card balances and pay the balance off in full in 24 months or two years.
Achievable
An achievable goal will usually answer questions such as:
How can I accomplish this goal?
How realistic is the goal, based on other constraints, such as financial factors?
Achievable Example
By reducing monthly expenses by $250 (stop spending money on things I didnât need) and earning an extra $250 in income I will be able to afford $500 towards my credit card balances each month.
Relevant
A relevant goal can answer "yes" to these questions:
Does this seem worthwhile?
Is this the right time?
Does this match our other efforts/needs?
Am I the right person to reach this goal?
Is it applicable in the current socio-economic environment?
Relevant Example
First, I would have to stop accumulating debt so that my balances would remain below $12,000, which meant I had to stop using my credit cards. Second, by utilizing various apps that tracked my spending I was able to see where my money was going. Third, I only worked during the week, so my weekends were open for a part-time job delivering food, babysitting, selling handmade jewelry, or braiding hair to earn additional income.
Timely
A time-bound goal will usually answer these questions:
When?
What can I do six months from now?
What can I do six weeks from now?
What can I do today?
Timely Example
I will begin working towards my goal today and have made credit balances pay off in two years.
Establishing a smart goal is an excellent start, but itâs not enough to achieve that goal. To achieve a goal a system must be put in place. Writing down a goal in your journal and setting it on your nightstand lacks accountability. As I have stated before knowledge without application is powerless. I needed to pay off my credit card debt and never build that debt back up.
An Example of a NOT-so S.M.A.R.T. Goal:
âIâm going to pay off all my credit cards this year.â
An Example of a SMART Goal:
"I'm going to pay off my $12,000 in credit card balances by paying $500 per month by reducing my monthly expenses by $250 and earning $250 more income every month. In two years, the debt will be paid off in full and then I will invest that $500 into my retirement savings.â
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