Examples of SMART Financial Goals

You’ve heard all about the SMART goals you need to have, but do you even know what that means? What are some examples of SMART Financial Goals that will motivate you to implement them? Find out here!

Don’t be put off by the capital letters! I’m not writing SMART just to place emphasis on the notion of intelligent and carefully thought-out financial goals and decisions.

In this case, “SMART” is actually an acronym, and we’ll be discussing what each letter stands for and why it’s important to think SMART when it comes to your financial future. We’ll also go through some SMART financial goals examples, so after reading them you’ll be ready to start making yours!

But first, what are SMART Financial Goals?

As I mentioned above, SMART is an acronym, and here’s what each letter represents:

Specific
Measurable
Attainable
Realistic
Timely

Let’s look at each of these individually to understand what they mean in financial terms.

Specific

This tells us that when setting our financial goals, we need to choose them so they’re tangible and clear, something we can point to and talk about in very specific terms. For example, “get rich” is a non-specific goal because it doesn’t give us any specifics about the key term ”rich”. Does that mean owning multiple properties, living off tenants and their rent? Does it mean being a millionaire, or a billionaire? We need our goals to be specific.

A better financial goal example would be “I want to save $5,000 by the end of the calendar year.” That’s a specific goal because it sets a real dollar amount and a timeframe. Another thing that “Specific” demands is that we also be able to say in clear terms why this particular goal is important to us.

Measurable

This part of the acronym refers to how you can keep track of your goals as you’re working toward achieving them. If your SMART money goals are specific enough as the previous “S” requirement mentioned, then you should also be able to apply measurement to your progress.

A measurable goal is not only one that you can keep track of in dollar terms, but one in which you can quickly determine if you’re on track or behind schedule. The measurement, therefore, has to factor in the timeframe. Let’s keep the previous financial goal example: if you want to save $5,000 by the end of the calendar year and you’ve only saved $1900 by June, then you are clearly behind schedule.

Attainable

This term refers to goals that are feasible according to the means you have right now. They are goals for which you can put into place concrete plans of action and then carry them out because you have the resources and wherewithal to do so. For example, if you earn $2,000 a month as a net income, it’s unrealistic to say you’ll save $1,800 a month. While it may be technically possible to set aside $1,800 the moment you receive your salary, it would only leave you with $200 for all your expenses, which is unrealistic.

Keep goals attainable by creating actionable plans that make the goal achievable in the timeframe that you set.

Realistic

Some people confuse the “A” and the “R” parts of the SMART acronym. It’s true that an attainable plan is also a realistic one, but the latter deals more with probabilities and reasonable chance, while the former looks at available resources to see if a plan is strictly achievable. Something that is technically attainable may also not be realistic.

Let’s set some examples of realistic financial goals to better illustrate their difference. Winning the lottery before you’re 30 is an attainable goal because lottery tickets are cheap and you have as much chance of winning as anyone else; however, winning before you’re 30, or even before you’re 100 years old is not a realistic possibility.

Timely

This is also an important aspect when setting SMART financial goals because it focuses on the deadlines that you set yourself to achieve those targets. Becoming a billionaire in 2 years is not a “timely” objective, because that example corresponds to a long-term financial goal (kinda very long-term!) and warrants a more distant deadline. On the other hand, planning accordingly to the $200 a month you can set aside to repay credit card debt, so that you’re clear of your current debt within 12 months, is a great timely goal.

To help you keep your financial goals “timely” you should split them into short term, medium-term and long term.

Short term – targets that you can realistically reach within 1 year
Medium term – targets that you can realistically reach in 2-5 years
Long term – targets for which you will need more than 5 years to realistically achieve

How do you easily put targets into these timeframes? It’s actually easier than you think, but it does take some forethought and preparation. We’ll take a look at some long-term, mid-term, and short-term financial goals examples in a section below.

Long, Medium and Short-Term SMART Financial Goals

So now you understand the acronym SMART and how it pertains to your financial goals. At the end of our list, we mentioned the need to divide your SMART goals into short, medium, and long-term goals. How do you do this?

Calculating Timeframe for Financial Goals

The first thing you need to do is get a total grip on your personal financial situation. You need to know how much money you’ve got, where it is and where you are spending it. When you get a clear picture of your income and expenses, then you know how much money you have to allocate towards your financial goals. You can then calculate how long it will take, based on the money you have or reasonably expect to have, to achieve the goal.

Above we mentioned an example of credit card debt. Let’s say you’re paying off a total of $2,100 on your credit card. Once you work out your expenses, and perhaps make some adjustments to increase the amount you have spare each month – canceling a streaming service, getting rid of the car, cooking at home instead of eating out, etc. – then you can make a calculation.

Let’s continue with the example that your SMART financial goal is to get out of credit card debt. Is it short term, medium term, or long term? Let’s work it out with the following case scenario: after your savings, you can put together $450 a month to pay off this credit card debt. That means that in 5 months, the debt will be gone; that’s a financial short-term goal example because it’s within 1 year.

Examples of Short, Medium, and Long-Term SMART Goals

Let’s explore some more financial SMART goals examples by looking at ones that can be categorized into each of the timeframes mentioned above.

Short Term – Save enough money to buy a used car Worth $3,000 or less before Christmas

Let’s start with this SMART goal example for saving money and see how it fits into the SMART framework. First of all, it’s specific because it’s not just “a car,” but “a USED car worth $3,000 or less” so it mentions a type (used) and a price range ($3,000). It also has a timeframe, before Christmas. Let’s say it’s March now, so that gives us 9 months or so to get the job done.

Is it measurable, attainable, and realistic? Let’s see. For the first, we have a specific dollar amount goal and a timeframe, so we can easily measure progress. We have 9 months so we can put a plan into action to save $400 per month towards this goal. After looking into our budget, we realize we can make this contribution and we can sustain it over 9 months without taking any risks. Thus, we have a specific, measurable, attainable, realistic, and timely financial goal. Since it’s completed within 12 months, it’s a short-term goal.

Medium Term – Put together a 10-percent deposit on a property worth $200,000

Here’s a medium-term financial goal example; how we know it’s a medium-term goal we will see further below. First of all, this is specific because it sets out a clear percentage of a total that we want to save – 10 percent of $200,000, which comes to an even $20,000. For most people, this is clearly not something you could do inside of a single year, so it’s already ruled out as short-term.

We can measure our progress easily according to our target amount, and put plans in action to attain the goal in a realistic way. Let’s say that we have $5,000 coming in each month as a gross, leaving us a net of about $3,500 after our main expenses are factored in. How much of that $3,500 can we save? Let’s say we can afford to take $800 a month to put towards this specific goal. Now it’s time for some math.

We have $800 a month, and our target is $20,000, which means that it will take 25 months to reach the goal. That’s just over 2 years. Using our timeframe guide above, that places this goal firmly in the “medium-term goals” bracket. Even if we decided to make our plan more attainable and realistic by lowering the monthly amount to $650, we could still achieve the goal within 31 months, which is 2 years and 7 months – 6 months longer than the previous. As long as it’s less than 5 years, it counts as an intermediate financial goal.

Long Term – Increase my personal net worth to $500,000 within 10 years

Your net worth is all that you own (your assets) minus all that you owe (your liabilities). You might currently have a net worth of a few tens of thousands, or it could even be in the red. Let’s see about this SMART financial goal of increasing one’s net worth to $500,000 within 10 years. Does it really fit with the SMART criteria?

It’s certainly specific as it sets out both a clear dollar amount and a time frame in which to achieve it. We can also measure net worth easily by simply subtracting our liabilities from our assets. If we have a high income that allows us money to set aside to reach this goal, then it’s also both attainable and realistic. We couldn’t do this easily with only small amounts set aside each month since we’d probably need a “super long-term” category.

Let’s say that with our income and plan for investments, we calculate that we can add approximately 25 percent to our net worth each year, which currently stands at $50,000. If we calculate that, then it will take us approximately 10-11 years to achieve this personal financial goal. This example is therefore within the long-term category.

In conclusion, think about your SMART financial goals and turn your vague money-related notions into specific, measurable, attainable, realistic, and timely goals that you can achieve when you want. When you get SMART, the dreams can more easily become realities.