Goodbye Resolutions, Hello S.M.A.R.T. Goals
We're already full speed into the New Year and, if you're anything like the old me, you've already forgotten or given up on the financial resolutions you promised to keep. Personally, I only made one resolution this year: to be happy with what I have, because I do not want to shop at all while I’m paying off debt. However, because I moved on New Year's Day, and my apartment feels somewhat incomplete, it's been difficult to stay content. To curb the desire to buy things for my new place, as well as stay on track with my debt repayment plan, I have set a S.M.A.R.T. goal for myself.
S.M.A.R.T. goals were originally created for project managers, as a tool to use from start-to-finish on a new project. But the words specific, measurable, attainable, relevant and timely can all be used to describe the actions required for goals in life. And a resolution is just a dream until you create an action plan to make it a reality. So, why wouldn't you use this same working process to create personal financial goals? Let’s take a look at how I broke down one of my 2012 financial goals into a S.M.A.R.T. goal.
The Goal: What do you want to accomplish?
I want to pay off my credit card debt before the end of the summer.
Specific: What exactly do you want to accomplish?
I want to pay off my credit card debt.
Measurable: How will you know when it is accomplished?
When my credit card bill says I owe $0.00.
Attainable: How can it be accomplished?
First, I will use my 2011 tax return. Then, I will continue not shopping at all and, instead, put any extra money I have on my debt.
Relevant: Is it the right time to do this?
Absolutely. Nobody should have credit card debt and I want mine gone as soon as possible. I need to take advantage of having a few extra hundred dollars each month, by putting it onto my debt and getting rid of my balance once and for all.
Timely: When do you hope to accomplish this goal? Why then?
I want to pay off the balance of my credit card on, or before, August 31, 2012. Originally, I wanted to finish paying it off by the time I finished school (July 15, 2012). But after doing a quick calculation of what my 2011 tax return should be, I looked at what I could afford to pay each month and decided the end of July was more reasonable. To make up for any potential emergencies from now until then, I decided to choose the end of August as my goal end date. This leaves me with some wiggle room, making the goal that much more achievable.
Are you starting to see how a resolution needs to have specific, measurable details, in order to stay focused on achieving it? Now, think about your own finances and what you want to accomplish this year. Maybe you have a credit card to pay off, like I do. Or you might want to start saving a down payment for a new place. Instead of daydreaming about it, write out what you want and figure out what steps you will need to climb, in order to get what you want. And remember to always leave room for “life,” because goals that are too strict will almost always fail.
Cait Flanders is a communications specialist working in the publishing industry. For the past year, she's also been blogging her way out of more than $28,000 of consumer and student debt. Read more from her on www.blondeonabudget.ca.