Get SMART with your Goals

Get SMART with your Goals


I hate annual performance reviews.


All my nine-to-fivers out there know what I am talking about.


The worst part is coming up with goals for yourself for the upcoming year.  I can’t count the number of times I created a list of my annual goals to have it get kicked back to me with the words “please be more specific” or “you can’t repeat goals from last year.”


Look at the following goals I put down from the past couple of years:

  • 2014: “Develop leadership skills”
  • 2015: “Improve leadership abilities”
  • 2016: “Become a better leader”

Ok, ok.  I see what they were saying.


My manager told me to put down SMART goals.  Smart goals? I thought my goals were smart.

What is SMART?


SMART is an acronym that refers to a goal setting criteria used by businesses and individuals.  Originally, it was a tool used to improve the project management process in businesses.  In 1981, an article titled “There’s a S.M.A.R.T. way to write management goals and objectives” introduced the acronym to the world.  It is now being used all over the world for setting all sorts of goals.

What does the SMART acronym mean?


The meaning of the SMART acronym varies depending on who you are talking to.  I will use the meaning that is the most appropriate for the Personal Finance community.

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-bound

Using SMART to make better goals


We all set goals.  Some of us create goals in our heads (me) and others write goals down.  Most of us, however, rarely use a structured approach like SMART.  Let’s walk through each of the criteria.




How specific are your goals? “I want to be debt free” is a vague goal. Drafting a specific goal is important because it allows you to be focused in your efforts. To make a vague goal better, try these five “W” questions:


  • What do I want to accomplish?
  • Why is this goal important?
  • Who is involved?
  • Where do I need to go?
  • Which resources or limits are involved?


An example of a specific goal would be: “I want to increase my income in order to be debt free and financially independent from my parents.”




To make your goals even better, throw in some numbers.  Numbers help quantify progress.  There is a big difference between a goal being 10% completed and 70% complete.  To add numbers or metrics to your goals, think about the following:


  • What is the dollar value of the goal?
  • How many tasks does the goal involve?
  • What metrics could I use to track progress?
  • How many weeks, months, years should this goal take to accomplish?


An example of a measurable goal would be: “I want to pay off 50% of my $75K student loan debt in 12 months time.”



So you got specific and threw in some numbers, but are your goals achievable?  This is where you have to be honest with yourself.  I usually skip this step during my goal setting process.  It often results in me being over ambitious and not even getting close to reaching my goals.  How do you create achievable goals?  Try this:


  • Think about how you will actually accomplish this goal. What tools do you need? Do you have the time available to work on the goal? Do you need others assistance in reaching the goal?
  • Think about potential roadblocks. What are things that will make accomplish this goal more difficult?
  • A key question to ask is “Am I in control of achieving this goal?” For example, let’s say you have a goal of going to Harvard Business School. You have all the best credentials and recommendations, but your admission to HBS still depends on the school. You cannot force them to have you. Rather, it’s up to them whether they choose you or not. Thus, you are not in control of accomplishing that goal.




Once you have a good framework for your goals, the next step is to determine its relevance to your life as a whole.  For example, imagine you desired to pay off your loans by cutting expenses and living off of peanut butter sandwiches for a couple of months, but you had a baby on the way.  I would assume the baby is more important than the loans.  As result, the original goal of paying off loans quickly is not relevant anymore due to a more important goal of saving for a newborn.  Questions to consider when thinking about relevance:


  • Is this the right time?
  • How does this fit with the other areas of my life?
  • Is this consistent with other goals I have?
  • Is the return on the time and effort spent accomplishing the goal worth it?




The final step of the SMART method is setting a target deadline.  Include dates and periods for when you expect to get particular tasks done.  Long-term goals like reducing debt or building wealth can take years, so breaking down long-term goals into smaller tasks associated with target dates will help keep you on track.  Here are some questions to ask yourself on setting target dates:


  • When, specifically (day, month, year, etc.), do you want to complete the goal?
  • What can be accomplished this week?
  • What can be completed a month from now?


An example would be: I want to pay off all of my $30K debt by January 2018, with 50% knocked out by September 2017.


Why make better goals?


There are many benefits to goal setting in a structured way.  I will highlight a couple of benefits:


  1. Your vague “shoulda, coulda, woulda” wishes will turn into clear goals that will bring clarity to your wants.
  2. You will have more of a thorough understanding of your goals
  3. You will focus your time on working towards goals that are the most valuable to you.
  4. You will be more motivated.
  5. You will be more efficient with your time
  6. You will be able to make better decisions.
  7. You will accomplish more in life.


As you can see, when you get SMART with your goals, you get SMART with your finances and ultimately with your life.

What is your approach to goal setting? Let me know in the comments: