Have you heard of the term fresh start effect? It means you can achieve your goal easier when you start your work based on temporal landmarks. New Year is one of them.
So, if you’ve decided to achieve a new financial goal, you did it at a great time. You just need the right plan to make it work. The SMART methodology can be perfect for this resolution. Find out how you can use this effective tool to smash your financial goals in 2023:
What Is a SMART Financial Goal?
SMART stands for Specific, Measurable, Attainable, Relevant, and Timebound. This methodology helps you progress toward your goals by giving a sense of direction and improved self-organization.
So, what does setting a SMART financial goal look like in real life? Here’s an example:
|SMART goal element||Example|
|S = Specific||Invest €6,000 in 2023|
|M = Measurable||Save €500 to invest every month|
|A = Attainable||Yes, you can manage your monthly expenses without that €500|
|R = Relevant||It’s relevant to your long-term investment goal|
|T = Timebound||The next 12 months|
How to Set SMART Financial Goals?
Here are three easy steps to define your goals and achieve them according to the SMART methodology.
Step 1: Set Your Target
Applying the SMART methodology starts with assessing your target. Imagine you want to save €6,000 by the end of 2023. That is a considerable amount, but you can break it down into smaller goals, e.g., monthly amounts to save. Simply divide that total amount by 12 to see how much you have to save every month: €6,000/12 = €500.
Step 2: Create an Action Plan
Next, you must create a step-by-step plan to help you achieve that goal. This is essential because, without a detailed plan, it’s easy to lose track of your goals.
If you haven’t been saving, you’ll probably have to reduce your spending or find additional income sources to save or invest €500 per month.
First, try to review your spending and find opportunities for reducing it. For example, you can probably spend €200 less on ordering takeout, or use public transport instead of driving, etc.
Another action step will involve finding some activities that will help you earn more. There are many ways to generate additional income in 2023 — starting from consulting companies or individuals and ending with tutoring or offering cleaning services in your spare time.
Step 3. Stick to Your Plan and Review Your Progress
Once you’ve made an action plan, start implementing it. Make sure you remember to review your progress weekly or monthly, so you can see you are moving closer to achieving a goal or decide to revise your plan if it doesn’t work.
You can easily apply the SMART methodology to set your financial goals and achieve them in 2023. This method will help you choose realistic goals, structure your plan, and keep yourself accountable. Good luck with achieving your SMART financial goals in 2023!