The start of the year is a great time to think about SMART goals, but it’s not enough to blindly follow this widely popular approach.
SMART goals. You know, specific, measurable, agreed upon, realistic and time-based. There are slight variations floating around (as listed below), which gives it a more comprehensive definition:
- S – specific, significant, stretching
- M – measurable, meaningful, motivational
- A – agreed upon, attainable, achievable, acceptable, action-oriented
- R – realistic, relevant, reasonable, rewarding, results-oriented
- T – time-based, timely, tangible, trackable
But something is missing. Consider these examples that fit the definition:
- Net Worth – Achieving your goal of having $1 million dollars by the time you retire at 65 is awesome, but it’s more important to keep that million dollars and not lose it right after.
- Part Time – You can pledge to work 3 nights a week as a side hustle to earn extra income, but that’d be meaningless if you quit after a month.
- Reduce Debt – Making a goal to eliminate your debt in two years is a mighty one, but what’s the point if you are going to dip back into debt?
A Goal Absolutely Needs to be Sustainable
I give more emphasis here at MoneyNing on the psychological and emotional side of personal finance than the practical side. It’s not because step by step guides aren’t useful, but we need more than that to succeed.
Financial freedom requires not only a quick fix, but a habit change. The five step guide that will for sure cut your monthly expenses in half is a nice place to start, but learn to see the beauty of frugal living and you won’t need to look for ways to cut back since you won’t consume more than necessary.
Don’t ask for a fish all the time. Learn to fish instead.
- It’s not enough to merely accumulate a massive nest egg. That’s why you need to focus on income rather than net worth in retirement.
- Part time is a great way to earn some more money, but working one day a week is much better than three if you can actually stick to your plan for the long haul.
- You can strive to be a high income individual and rid your debt that way, but a hiccup with your job and you will be right back to square one if you inflated your lifestyle along the way. That’s why simplicity is so powerful. It’s lasting.
Let me add an “S” to SMART goals.
S – Sustainable, Small, Simple
People who have some “SMARTS” in them will always do better. Career, money, relationship and everything else. Start your year right and make SMARTS goals.
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My family members always say that I am wasting my time here at net, but I
know I am getting know-how every day by reading such good posts.
Wow! Great stuff! Practical, dripping with financial and personal wisdom! What you teach here should be taught in every public and private high school and college in America! We are starving from our financial stupidity from home and family to the White House and Congress!
I signed up and told my two sons and their wives about this site and newsletter. The best gift I could give them!
David
Totally agree. Goals need to be sustainable. This is why I have always like Dave Ramsey’s approach to eliminating debt: Get rid of the smaller ones first and then move to the bigger ones. This deals with the emotional aspect of paying off debt rather than just the monetarial (if that’s a word). If goals are sustainable or realistic, people get discouraged.
Thanks for the great post.
Nice. A while back I went down a similar side of things and choose ‘Strategy’ as my underside of SMART, but completely missed sustainability.
Good call.
You said the important thing is to “learn to fish” That is so true, because it is consistency that brings results. You can’t teach “Luck”.
John DeFlumeri Jr
I agree with all the comments. I find it important to set goals and then financially you will strive to meet them.
Thats awesome lil system. Smart and simple. Focus one one thing, and work till its done, then move one
Agree, having something specific will really help you plan and achieve your goal. Sometimes things are too broad and hard to define success.
Sustainable is important to consider for sure. Managing money and losing weight are similar. We’ve all heard (or heard our wives) talk about the latest fad. The one that matters is the one that sticks. This speaks of persistence.
Consistency is definitely key here. It is important to be able to be consistent with your goals and you’re right- saving money is not simply a goal but it will be a way of life after you’ve reached that goal. Creating good habits now will definitely help in the long-run.
Sustainable is definitely the key. Something that works for 4 weeks won’t do much good in the long-run.
Great info. We all want to improve our lives and do better. SMART goals is a great way to define exactly what we want and achieve them.
I have been setting and achieving SMART goals for years and love the process.
Great point. Attainable and sustainable must go hand in hand. Crash diets almost never work. A permanent reduction in calories consumed and increase in calories spent does work. The same principles apply to spending and saving money.