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Financial Literacy

  • 4 mins

Mastering Goal Setting: An Introduction to the SMART Model

Cam Mulvey

April 3, 2024

Tired of goals that lead to nowhere? Setting goals is one thing; achieving them is another. But sometimes, goals were destined to fail from the very beginning. If a goal is crafted thoroughly, its chances of success tumble. That’s why the SMART goal model has gained so much traction and helped so many people achieve success. 

What is SMART? 

Setting goals is essential, but how we set them makes all the difference. The SMART model is a powerful tool to give your goals structure and clarity. But what exactly does SMART stand for? Let's break it down:

A SMART Goal Template to help identify what is a smart goal

But where did the SMART model come from? The term was first coined by George T. Doran in a 1981 issue of 'Management Review'. Basically, it was a professional model first. Some early Professional Smart goal examples may have included things like project management, employee performance management, and personal development. But its effectiveness couldn't be confined to just the workplace. Today, the SMART model is a universal tool, adaptable to virtually any goal, be it personal development, financial planning, or even fitness goals.

Breaking Down the SMART Model

  • Specific
    • Why Specificity Matters: Goals need to be specific to provide a clear direction. Think of it as setting a definitive target rather than shooting in the dark.
    • Examples: Compare "I want to save money" (vague) with "I want to save $500 for a vacation" (specific). The latter provides a clear aim and is easier to focus on.
  • Measurable
    • The Power of Measurability: When you can measure your progress, it's easier to stay motivated and on track.
    • Implementation: Include details like numbers, percentages, or specific milestones in your goals. For example, rather than saying "increase sales," aim for "increase sales by 20% within six months."
  • Achievable
    • Realistic Aspirations: Goals should stretch your abilities but remain possible.
    • Balancing Act: Weigh your ambition against practicality. Set goals that are challenging yet within your reach considering current resources and skills.
  • Relevant
    • Alignment with Objectives: Your goals should resonate with your broader life or career aspirations.
    • The Role of Relevance: A goal that aligns with your values and long-term objectives is more motivating and meaningful. For instance, saving for education aligns with long-term career growth.
  • Time-Bound
    • The Importance of Deadlines: Deadlines create urgency and help in prioritizing tasks.
    • Effective Timing: Be realistic about the time frame. For example, saving $10 per week sets a paced, achievable timeline towards a larger annual saving goal.

Each element of the SMART model interconnects to create a comprehensive and effective approach to goal setting, ensuring that your objectives are well-defined, trackable, and achievable.

Benefits of Using the SMART Model

  • Enhanced Clarity and Focus
    • The SMART model provides a clear roadmap for your goals. With its emphasis on specific and measurable objectives, you can concentrate your efforts more effectively, minimizing distractions and uncertainties.
  • Increased Motivation and Commitment
    • Setting realistic and relevant goals boosts motivation. When you can see a clear path to achievement and understand how it aligns with your values, commitment naturally increases.
  • Better Resource Management
    • By defining time-bound and achievable goals, you're better positioned to allocate your resources (time, money, effort) efficiently. This leads to more strategic planning and use of resources.
  • Improved Success Rates in Goal Achievement
    • The structure of the SMART model enhances the likelihood of success. By breaking down goals into manageable, trackable parts, you can monitor progress and make necessary adjustments, leading to higher achievement rates.

Applying the SMART Model with Context and Examples

  • SMART Goals for Personal Life and Self-Improvement
    • Context: Personal development often gets sidetracked by vague goals.
    • Example: "Read more books" → "Read two personal development books per month."
  • Career and Professional SMART Goals
    • Context: Career growth goals can lack specificity, making them hard to achieve.
    • Example: "Improve my job skills" → "Complete a specific professional certification in my field within six months."
  • SMART Goals for Health and Fitness
    • Context: Fitness objectives often fail due to their vagueness.
    • Example: "Lose weight" → "Exercise for 30 minutes, five days a week, for three months to lose 10 pounds."
  • Personal Finance SMART Goals
    • Context: Financial goals can be too broad, lacking clear action steps.
    • Example: "Save money" → "Save $200 monthly towards an emergency fund for one year."

Here’s a SMART Goal template, with the example of someone saving money for an upcoming vacation with their friends: 

Example of a professional smart goal

Common Pitfalls and How to Avoid Them

While SMART goals provide an incredibly effective format for goal-setting, the process may give rise to some unintended consequences. In the process of setting SMART goals, a common issue is aiming too high. Goals that are too ambitious may not be realistic, leading to disappointment. The key is to set goals that are challenging yet achievable, balancing aspiration with practicality. Just because the goal is formatted a certain way does not mean you’re more likely to achieve loftier goals. 

Sometimes, in the excitement of setting goals, one might overlook certain SMART elements. Missing any of the SMART elements can lead to goals that are unclear or unattainable. Regularly reviewing your goals ensures each element is considered and the goal remains on track.

Lastly, an inflexible approach to goal setting can be problematic. Life is dynamic, and sometimes, external circumstances change. When this happens, it's important to reassess and adjust goals accordingly, ensuring they remain relevant and attainable in the new context. Flexibility in goal setting is essential for long-term success. Setting a SMART goal once does not mean you should ignore other endeavors in pursuit of that goal. 

Call to Action

Now it's your turn to take control of your financial journey with SMART goals. What are your long-term aspirations? Whether it's about retirement, building a safety net, or reducing debt, remember that short-term goals are just as crucial. Common long-term goals often revolve around retirement planning, building an emergency fund, or paying off debt. But don't overlook the importance of short-term goals, which can be as straightforward as saving $1,000 for the next semester.

Why not start with something achievable, like saving a specific amount for an upcoming need?

Ready to redefine your financial future? Join our 'Master My Money Mindset Series'. This email series is designed to empower you and shed light on the psychology behind financial decisions. By dedicating just ten minutes a week, in five weeks, you can significantly transform your money mindset. Embrace this opportunity to reshape your financial perspective and take a step towards true financial empowerment. Sign up now and start your journey!

If you just need a place to get started with SMART Goals, download our SMART Goal Setting Worksheet.