Carrie and Dhruti have recently posted some helpful tips about settings goals and sticking with them. Dhruti talked about starting with realistic and small goals, but it can be hard to know what that means. So, I’ll be providing more detail about how to set effective goals.

To make them achievable, they must be SMART. The process to making SMART goals applies to any goal—whether you have resolved to improve your financial situation, lose weight, get in shape, or start school.

S – Specific
I used to teach first-year college students, some of whom learned the hard way that college is much different than high school. After a month, they were getting failing grades. When asked about their plans, they almost always said they would study harder. As you can see, these plans are not very specific and the students rarely achieved the desired result. An example of a good financial goal is to save $500 a month to purchase a car by the end of July.

M – Measurable
You must be able to measure your goal: number of minutes you exercise each week, the steps completed to apply for school, pant size, ounces of water you drank today, how early you got to bed last night. In the example with the car, there are two ways to measure. First, the overall goal, which is the total price of the car. Second, progress along the way, which is to save monthly until you’ve reached the total.

A – Achievable
Did you establish a goal that you can achieve? If you bring home $1,000 a month and you plan to put $500 toward the car, is that possible? Will other bills or spending habits prevent you from saving that much money? These are all things to consider when determining if your goal is achievable.

R – Realistic
When I was younger, I wanted to be a professional football player. While it’s good to pursue your dreams and aspirations, there comes a time when your dream becomes unrealistic. Striving for unrealistic goals can cost you time and money. Make sure your goal is realistic. It can help to break up the goal into smaller, more manageable steps that build up your ability and confidence.

T – Time Oriented
Goals can be short-term (up to 1 year), intermediate (1-5 years), and long-term (5 or more years). The important component is that it must have an end date.  Goals can be forgotten when there is no time frame or way to measure progress. A good example is saving money for a house. You may need as much as ten thousand dollars. By setting a date and measuring your progress, you will stay motivated to reach the end goal.

Keep your goals fresh and review them on a regular basis. Once a goal is achieved, create a new one. If you are no longer making progress, reassess, and try something else. Don’t let your goals get stale.

Good luck in the New Year and be SMART!