Have you ever thought about what it takes to achieve financial success? It’s more than just writing down your money goals and moving on. Achieving financial success takes discipline, dedication, and sacrifice. Simply put – It is not easy!
You need to set both short-term money goals and long-term money goals. These are promises to yourself and to your family. You need to set a plan in motion to achieve your money goals and financial dreams.
Think about it… being able to afford your picture of the American dream is on you and your willingness to put in the work. What are you willing to sacrifice?
What is a SMART Goal?
Have you ever heard of “SMART” goals? There are 5 elements to a “SMART” goal.
The goal must be specific, measurable, achievable, relevant, and time-based.
If your goals have all five of these elements you are more likely to succeed in achieving them.
SMART Money Goals
1. Build your Emergency Fund
An emergency fund is there to protect you when something major goes wrong in life. Something will happen, and you will want money to fall back on.
An emergency fund is your safety net for the unknown.
Most financial experts advise us to save at least three months’ worth of expenses in our emergency fund. Six months is a strong emergency fund.
If you plan to build your emergency fund in 2020 create SMART money goals.
Example: My emergency fund will be at $10,000 by December 2020.
Don’t let unforeseen circumstances derail your financial success.
2. Pay Off Debt
Paying down debt is one of the best things you can do for yourself financially. Debt is a burden and will keep you from reaching your other goals.
Instead of your paycheck belonging to you each week, it belongs to the creditors you owe money to. By paying off a debt you will gain financial control again.
If you plan to pay off a debt in 2020 create SMART money goals.
Example: I will pay off credit card 1 with a balance of $2,000 by February 15, 2020.
When paying off a debt I like to create smaller money goals. They are much easier to achieve and will give you money wins throughout the year.
After paying off your first debt be sure to set a goal for paying off the next debt or working on other money goals.
If paying off your credit card debt or other loans wasn’t a priority it should be. Debt Freedom allows you to invest more of your money in yourself and in your family.
3. Increase Your Income
If you are paying off debt or building your emergency fund, increasing your income is a great way to reach your goals sooner.
You can do this by finding a side hustle that you enjoy. Maybe you want to start a blog or pick up a few nights delivering pizza. Every little bit helps.
While increasing your income can be a general goal you can definitely use the elements of SMART goals to ensure you reach your desired income.
If you plan to increase your income in 2020 create SMART money goals.
Example: I will increase my income by $5,000 this year delivering pizzas two nights per week.
4. Read Personal Finance Books
If you are serious about getting out of debt or bettering yourself financially I highly recommend reading personal finance books.
Reading personal finance books will give you a wealth of knowledge and if you take actionable steps from any book you read you’ll be farther ahead than when you started.
If you plan to read personal finance books in 2020 create SMART money goals.
Example: I will read 6 personal finance books in 2020 (every other month) and implement at least one thing I learned into my daily life.
When reading personal finance books be sure to take notes so you can go back and implement what you have learned later.
If you are not going to take action on what you have read and learned, don’t waste your time reading the books.
5. Max Out Your Roth IRA
A Roth IRA is an individual retirement account where you put money in after tax.
This account then grows tax-free, which is amazing especially if you are young! You won’t be burdened with a huge tax bill when you retire.
If you plan to max out your Roth IRA in 2020 create SMART money goals.
Example: I will invest $500 into my Roth IRA every month during 2020.
6. Create a Budget and Stick to It
A budget shouldn’t be scary. A budget is actually the driving force for all things personal finance.
Whether you are paying off debt or working on investing knowing how much money you have coming in and where it is going out is super important.
We finally started gaining traction with our money due to creating a budget and sticking to it.
Our favorite way to budget is with YNAB: You Need A Budget. It is a cloud-based software that both my husband and I can access from our phones or any computer.
YNAB has changed the way we budget and view money! You can try YNAB for 34 days FREE by clicking here.
If you plan to create a budget in 2020 create SMART money goals.
Example: I will create my budget before the 1st of every month. I will then check in every week on Friday to update my spending and make adjustments as necessary.
7. Pay Yourself First
Have you ever heard of paying yourself first? It is simply saving a set amount of money each month before you do anything else.
You need to prioritize what matters the most to you. While spending money in the now seems like the best thing to do, looking long-term is even more important.
If you plan to pay yourself first in 2020 create SMART money goals.
Example: I will save $500 per month for long-term expenses and goals.
You can take this a step further and list out each long-term expense and goal you are working toward and make SMART money goals for each.
8. Relax and Enjoy Your Money
I know our first 5 goals were pretty hardcore and are going to take a lot of discipline and sacrifice.
We went for two years without taking a vacation or really spending any money on ourselves. Then in 2018 we took two cruises and did a few smaller trips all while paying off thousands of dollars in debt.
We stopped depriving ourselves and started to enjoy our money a little bit. We didn’t go overboard, but we put ourselves into a better state of mind by spending a bit on ourselves.
It didn’t feel like such a burden every month to put money toward debt because we knew we had something for ourselves to look forward to.
That may sound counter-intuitive when you are paying off debt or building your emergency fund – but trust me, doing something for yourself and learning to relax will help you in the long run.
Maybe traveling doesn’t make you happy. Plan a staycation or some other way to relax and break from your norm.
If you plan to relax and enjoy your money in 2020 create SMART money goals.
Example: I will travel to Florida in October. I will need $1,000 for the entire trip including travel, food, lodging, and spending money.
When traveling be sure to break your expenses down. You will most likely need to pay for some of your travel expenses upfront like airfare and hotel stays. You will want to reach these goals sooner than when you are going on your trip.
9. Save for a Big Ticket Item
Do you need a laptop? Is your stove on its last leg? These are big-ticket items that you should be saving for especially if you see the end in sight for what you currently own.
You will want to create a goal to save for these big-ticket items. Maybe you have 12 months or 15 months before you would like to replace the item.
Figure out how much time you have and how much money you need. Then set a little bit aside each month.
When your laptop finally dies you’ll have the money to replace it without busting out the credit card!
If you plan to save for a big-ticket item in 2020 create SMART money goals.
Example: I will save $175 per month to buy a new MacBook Pro in January 2021.
10. Make Giving a Priority
While saving our money and spending our money on things that are important to us. We can do so much good when we make giving a priority.
Find a charity you know and love to donate to each month. A few dollars per month can go a long way!
If you plan to make giving a priority in 2020 create SMART money goals.
Example: I will give $100 per month to the local food bank.
Creating smart money goals will help you become successful financially.
Personal finance does not have to be difficult. If you create a budget based on your values you will be able to do so much more with your money. Be sure to create SMART money goals and check in with them often.
I recommend having a monthly money meeting with your family to go over your budget and goals. This will help ensure you are on track, or if you have fallen off track you can get back on course. It is also okay to adjust your goals and plans as needed if something arises.