SMART Move

SMART Move

February 21, 2024

SMART Financial Goals Can Help Guide Your Way to Financial Wellness

Financial goals play a crucial role in the pursuit of financial wellness. Whether it’s paying off credit card debt, saving for retirement, making a down payment on a home — or any other goal — they help guide your actions, habits and decision-making.

As you think about your financial future, consider creating SMART financial goals. SMART is an acronym that stands for specific, measurable, achievable, relevant and time-bound. Instead of setting goals with vague aspirations (such as “I need to start saving more money”), SMART goals encourage you to think things through and define what success looks like. Here’s how you can create SMART financial goals:

  • Specific: Define exactly what you want to achieve. Instead of saying “I want to save money,” specify the amount and purpose, such as “I want to save $5,000 for a down payment on a house in the next 12 months.”

  • Measurable: Set criteria to measure your progress. In the previous example, the measurable piece is the $5,000 target within 12 months. You can track your progress periodically to ensure you’re on the right path.

  • Achievable: Your goal should be realistic and attainable. Consider your income, expenses and other financial obligations. Saving $5,000 in a year might be achievable depending on your income and expenses, but saving $10,000 might not be.

  • Relevant: Make sure your goal aligns with your broader financial objectives and priorities. For instance, if your long-term goal is to retire early, saving for retirement or investing might be more important than saving for a luxury vacation.

  • Time-bound: Set a clear timeframe for achieving your goal. This adds a sense of urgency and helps you stay focused. For example, saving $5,000 within 12 months provides a deadline and helps structure your savings plan.

Here are some hypothetical examples of SMART goals:

Retirement Savings

  • Specific: Contribute $400 monthly to your workplace retirement plan

  • Measurable: Track monthly contributions and investment growth

  • Achievable: Adjust budget to allocate a fixed amount to retirement savings

  • Relevant: Securing financial stability postretirement

  • Time-bound: Consistently contribute $400 monthly for the next 30 years.

Emergency Fund

  • Specific: Save $3,000 in a dedicated emergency fund.

  • Measurable: Track monthly savings progress to reach $3,000 within 10 months.

  • Achievable: Allocate a portion of income or windfall (bonuses, tax refunds) toward savings.

  • Relevant: Provides a safety net for unexpected expenses.

  • Time-bound: Achieve the $3,000 goal within 10 months.

Debt Repayment

  • Specific: Pay off $8,000 in credit card debt

  • Measurable: Break down repayment into manageable monthly payments

  • Achievable: Adjust budget to allocate extra funds to debt repayment

  • Relevant: Eliminating high-interest debt saves money in the long run

  • Time-bound: Aim to pay off the $8,000 debt within 18 months (about $445 per month).

College Education Fund

  • Specific: Save $50,000 for a child’s college education

  • Measurable: Calculate required monthly savings to reach $50,000 in 18 years

  • Achievable: Set aside a portion of income specifically for education savings

  • Relevant: Investing in a child’s future education

  • Time-bound: Accumulate $50,000 in 18 years to help offset education expenses (about $2,800 per year, or $234 per month)

Informational Sources: How to Set SMART Financial Goals (Experian, April 11, 2022); How to Set SMART Financial Goals With Examples (Finmasters, November 27, 2023).

We are happy to help provide additional insight, feel free to reach out to me at joe@diversifiedfa.com or 800.307.0376.

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Disclosure: This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. Investment Advice and 3(38) Investment Fiduciary services offered through Diversified Financial Advisors, LLC, a Registered Investment Advisor. 3(16) Administrative Fiduciary Services provided by PISTL Service Corporation. Discretionary Trustee services provided by Printing Industries 401k Trustees. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. 

GRP-335-0224 (Exp. 02/25)