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
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?
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.
A measurable goal should address questions such as:
How will I know when it is accomplished?
I will pay $500 per month towards my credit card balances and pay the balance off in full in 24 months or two years.
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?
By reducing monthly expenses by $250 (stop spending money on things I didn’t need) and earning an extra $250 in income I will be able to afford $500 towards my credit card balances each month.
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?
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.
A time-bound goal will usually answer these questions:
What can I do six months from now?
What can I do six weeks from now?
What can I do today?
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 it’s 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:
“I’m going to pay off all my credit cards this year.”
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.”
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