In the article, Three Simple Tips to Manage Your Money, Sebastian Sanchez Cortes writes that defining your goal is the first of the three simple tips.
Well, that is easy to express; however organizing a goal can be overwhelming! Hopefully, my guidelines will make the process easier for you.
First, let us define a goal: Merriam defines it as, ” The end toward which effort is directed” .
The definition implies that we should look at the end first. So, the first question we should ask ourselves is, Where do we want to end? In referring to the article, How much money will we need? The rational in goal setting is to know the end and then make a plan of how to reach it.
Now that we have defined the goal and have identified the end product, the next step in the process is to build the structure for obtaining what we want.
For the structure, let’s use the SMART method. It is the easiest and most time-efficient process that I have seen in my experience. Below is the acronym explained:
Specific – It is important to know the exact goal – For the purpose of this project, let’s use the example of planning a vacation, to a Christmas Village in December. We will stay in a hotel for a two days. Travel will be minimal and we will need money for a few small gifts.
Measurable– It should be measured. An example, for the sake of simplicity, will be if the aim is to save $1000.00 for a vacation in December. That would mean to save $100.00 a month (starting in January) to have all the money needed by the end of October – in time to plan for the time away.
Action – Describe the action needed: From where will the allocated money ($100.00) be taken and how will it be saved? For example, Will there be a vacation club started with a local bank? Will there be cash stored in a petty cash box? This has to be a planned action in order to be successful.
To quote Benjamin Franklin: “By Failing to prepare, you are preparing to fail”
Realistic – Can the goal be accomplished? Is it realistic to save the money each month?
Timely – Will the money be saved in time to plan, make reservations, etc.?
Be SMART about defining your money management goals and your plan can be effectively reached.
To find out more about SMART goals, please click here.