SMART Goal + How to Reach it (for fitness and financial)

I read this article for fitness goals and losing weight, but it can definitely be applied to personal finance.

Plan your S M A R T Goal

S for Specific – Choose a specific outcome to achieve as a result of your plan.

FITNESS: Is it to lose weight this year? Or to tone up? Or maybe just to start walking half an hour a night?

FINANCIAL: Is it to save more money in your emergency fund? Maybe it’s to earn more money this year? Or to start saving for retirement on a bi-weekly/monthly basis?

Whatever it is, make it specific.

M for Measurable

FITNESS: Do you want to have your cholesterol be under 5.0? Or lose 10 pounds this year?

FINANCIAL: Do you want to save $1000 for your emergency fund? Or start putting $100 a month into retirement savings?

A for Achievable

FITNESS: If the smallest you’ve ever been as an adult is a size 10, it might not be achievable to aim to be a size 0. Perhaps if I’m currently a size 18, was a size 10 when I was 18-years-old, then now I would like to be a size 14. That seems achievable.

FINANCIAL: If you’ve only ever been able to save $50 at a time, don’t try and aim for the stars and save more than what you can afford. You do need to live after all. And if you happen to miss saving more than $50/month, you’ll feel much worse than before, and like a failure. But if you save more than $50/month because you tightened your belt on other things, you’ll feel amazing, because you’ve overachieved what you had set out to do.

R for Realistic

FITNESS: Maybe running a marathon is not a realistic goal given your commitments, even though it might be achievable if you had unrestricted time to train. Be realistic about what it is you want to do – if it’s not something you enjoy, you’re less likely to stick with it. Remember, physical activity can be any activity that elevates your heart rate and uses your muscles. If you enjoy hiking in the outdoors, plan brisk walks or snow shoeing. Go dancing if that’s what you like to do.

FINANCIAL: If you can’t commit to spending one hour a week to doing your finances for whatever reason, try 15 minute increments instead. Make it fun. Do it after dinner while the kids are in bed, or pair it with something pleasurable, like a piece of chocolate (I know, I know). So that way, you look forward to it. It has to become an enjoyable activity for you, even if it seems like a chore.

T for Time Bound

FITNESS: Set a deadline, or set multiple deadlines for various stages of progress towards your goal. For example, I want to lose 10 pounds by May 24, 2008, so I need to lose about 2 pounds per month.

FINANCIAL: For finances, like “have $500 in an emergency fund by June”, and then work it out. $500 / 6 months = about $83.33 a month at least.

Meet your SMART Goal

Commit your goal to paper – When you write out your goal, make sure it meets all the criteria for being a SMART goal. By committing your SMART Goal to paper, you’re demonstrating a serious commitment to achieving your goal.

FB: On a huge chart, you can write the words: “CLEAR DEBT BY AUGUST 2008”, and/or put a Post-It on your credit card/in a visible place on your wallet so that you are reminded every time you take out your wallet.

Keep it visible – post your written SMART Goal where you can see it – on your bathroom mirror, on your fridge, on your office wall, in your electronic task list, etc. If it’s visible, it will be harder to forget about.

FB: I really like this idea because you can list out all of your debts in a huge chart with their minimum monthly payments and write how much you put into the first debt each month. Then when the debt is paid, take a big red marker and cross out the debt and leave it like that. It will help motivate you to cross off everything.

Share your goal – if you’ve shown your written SMART Goal to a friend or family member, you’ll feel a greater sense of commitment to your goal. Now it’s not just you that will want to see you succeed in attaining your Goal.

FB: Start a mini club. Find or make a group of 3 other friends who want to do different financial goals, and motivate each other on a regular basis to achieve those goals. Work as a team to achieve the goal.

Be accountable – ask your friend of family member to check in with you at specific time intervals to see how you’re progressing towards your Goal. Maybe set regular times for a brief meal together or a phone call once a month to check in.

FB: This one I’m not so sure about, but if you think it’ll work for you then go for it, it works on the idea that you won’t want to disappoint your friend/family member.

Make appointments with yourself – Treat your exercise times as you would any other important meeting. Put your scheduled exercise time into your day timer. If someone wants to meet with you, these time slots are unavailable.

FB: And for financial fitness, do 10 minutes a day to enter in your expenses when you have a wad of receipts at the end of the day, instead of collecting them all for the week then sorting through the mess of receipts and trying to squint and see the dates on each. And then on the weekend or at the end of the month, spend an hour and review over your finances.

Hire an expert – what do organizations do when they have a goal but don’t know how to get there? They bring in the consultants. If you’re not sure how to get started on your Physical Activity plan, consult with a certified trainer or qualified group exercise instructor. Not only will these coaches teach you what you need to do in order to meet your goals, they can help you stay motivated as well.

FB: You also have financial trainers – financial experts. Or, read some of the really amazing blogs on my blogroll on the right, they give some really great advice and I follow them religiously.

Plan a reward – establish a reward system for yourself to recognize the achievement of each stage of your goal. For example, write down on your SMART Goal page that for every 20 workouts, you’ll buy yourself a new exercise top, or a night out at a show. This will give you something to look forward to as you reach each target. Plan a larger reward for when you reach your ultimate goal.

FB: This is a great idea. Reward yourself with a small splurge, or with something like a chocolate bar, or a new book. Something small, but enough to give you pleasure, without breakin’ the bank. Of course, this is tied in to your SMART goal. If you want $500 in an emergency fund by July, you have to work towards it, and reward yourself in July if you’ve met it. Not before.

Think positive – don’t let small set backs defeat you. Think of exercise like brushing your teeth. We all know we should do it regularly. But every once in a while, we miss a session, and we just don’t feel right until we brush our teeth again. Exercise is much the same. We feel great if we do it consistently. If you find an activity you enjoy, and you stick with it, eventually it will be come like brushing your teeth. You’ll look forward to the way you feel once you’re done, and will miss it if you don’t.

FB: Same with finances. Stick to it, try it for 18 days (after 18 days, studies have shown that it becomes a habit). And actually, when you enter in expenses, think about this – the less you spend, the less you’ll have to write down or input 😉

Other financial ideas

Think about using cash jars. Take out the paycheques in cash (leaving whatever you need in the bank for automatic payments), put them into jars or envelopes that are clearly labelled, and see how you do.

– Paying with cash makes it harder to spend money.

– Paying with cash means the money is gone when the jar is empty.

– Paying with cash means you won’t get slapped with bank charges and fees because it’s cash.

– Paying with cash means you won’t have to pay ATM fees any more ($3 each time, anyone?)

It’s a simple system, and it’s quite effective.

But how do I know what to put in the jars for expenses?

Make a budget. The rules are:

– No more than 30% of your income spent on housing (rent, mortgage etc)

– Save at least 10% of what you earn into savings/emergency fund (if you can)

FB: I know some famillies cannot, but if you really can’t, save what you can. I’m not talking about families who DON’T want to save, I’m talking about the ones who say that going to Arby’s for a meal is a treat if they’re lucky. You know what I mean.

– Spend no more than 25% on living expenses (food, clothing, entertainment, gifts)

– Transportation should be no more than 15% of your paycheque

– Debt repayment should be 30% or less of your income.

FB: This one is flexible. I spend much more on debt repayment, but that’s because I don’t have normal living and housing expenses, so this is a rule I’d ascribe to if I had a mortgage and not education or credit card debt.

– Save at least 3 to 6 months worth of living expenses.

FB: They’re talking about MINIMUM living expenses. Shelter, Food, Transportation and Utilities, with a bit for Incidentals. This is just in case something happens to one or both of your incomes and/or an accident and you need to make it work for the next little while before you get back on your feet. 3 to 6 months is quite a daunting task so start small and manageable, like one month. Then build it up to two and before you know it, you’ll be at six.

Related Posts by other Fabulous Blogs

One Snarky Chica with Issues did a great post: “Frugal Ways To Get Fit in 2008“, and it’s worth a read!