Once you’ve gotten your personal values identified and the language and framing good enough to work with, next we need to think about how we can take those values and manifest them. We want to bring them out of the realm of thought and into the realm of being. This is where we map out, in very real terms, how we’ll create the life that is most meaningful to you and those around you. This is where we set some goals.

Have you ever set goals before? What was the experience? How did they turn out? For some people, they set some grandiose goal and it never pans out like they’d hoped. Perhaps it was a New Year’s resolution to change some aspect about themselves that after a few days, fell flat, leaving them dispirited. Other people are more successful, have seemingly more will-power or mojo or whatever that helps them achieve whatever it is they set out to do. But if we simply base our understanding of goals upon the outcomes we observe of others, or even our own past history, we’ll miss all that goes into them behind the scenes.

There’s some art, but really a lot of science, to designing goals that will help you achieve the outcomes you want. One of the most potent tools available to us is the S.M.A.R.T. framework for shaping your goal. As an acronym, we say that a S.M.A.R.T. goal is:

  • Specific: What exactly do you want to achieve?
  • Measurable: How will you know it’s been achieved?
  • Action-Oriented: What – within your control – will you DO to achieve it?
  • Accountable: Who will help keep you responsible for completing this goal?
  • Realistic: Is the goal feasible?
  • Relevant: Why is it applicable to your life?
  • Time-Bound: By when will the goal be achieved?

If you’re counting the letters, you’ll see what I’ve written is really “SMAARRT”, but just ignore that. I include these seven components due to what we know about the science of setting goals. (You’ll even find that among planners, there’s some variation in what the letters stand for. But for our purposes, this is good enough.) The point here is that we have a framework to guide us, with a checklist to ensure that we don’t leave something important up to chance.

In designing a goal, you need to REALLY slow down and approach it methodically. It can, at first try, feel insanely belabored. But when we take our time and do the planning right, the chance of achieving a successful outcome is GREATLY improved. I won’t say that achieving your goal is 100% secured, because unexpected things do happen in life. However, with a good goal design, the likelihood of a successful outcome can change from 5% (wishful thinking) to 90% (reliably in the bag). Let’s now go through each step:

Specific: What exactly do you want to achieve? e.g. To have enough money to buy a used car which will cost $4,000. Getting specific can take a bit of practice. If you can focus it down to a number, that can help. But to the extent that you can be really focused on what the outcome will look like, the easier it will be to a) aim for it and b) know when you’ve achieved it. Other specific goals could be opening a particular savings or investing account, getting your will and other estate planning documents written and signed, buying disability or life insurance, or paying off one of your debts. As long as it’s specific, there’s really an infinite range of goals one could have. Unless you have your heart set on something particular, you may want to try starting out with two goals: one “up” goal and one “down” goal. (An “up” goal would be something like building your emergency savings to a certain level. A “down” goal would be to pay off a debt.) If two goals are too distracting, then stay focused on just the one for starters. Once you achieve the win, you can always add more goals.

A word on debt goals.
Some financial gurus out there say that you should drain your savings and get rid of debt as fast and by any means possible, and that it costs less in the long run (the interest owed on debt will usually be much higher than any return on savings). Frankly, I think this is incredibly risky. When life hits the fan again, as it inevitably will, and you just paid out all your savings to pay off a credit card, where will you turn to find the cash to cover the emergency? The credit card. And so the cycle continues. Whereas, if you build savings while reducing debt, yes it will cost more in the long run, but a) your debt won’t balloon again, since you’ve pre-empted it, and b) you will have built the habit of building savings. Having that habit in place will forever change your life trajectory. Who is the most likely to undergo bankruptcy? Those who have been in bankruptcy before… because they used a quick fix to address their debt, but never changed their habits. Learning to pay off debt is one skill, but building savings is a different one, and you need both. My advice is not to put all your eggs into someone else’s basket.

Measurable: How will you know it’s been achieved? e.g. I will have $4,000 saved in my bank account dedicated for this purpose. In this case, you can clearly measure the amount of money. $4,000 is not the same as $3,872. By having a goal that’s measurable, you can see how far you have still to go to achieve it (in this case, $128). When it’s measurable, you can also break it down into manageable bites – say, $334/mo for 12 months. Now, not everything is measurable as a dollar amount. Goal outcomes can also be binary – meaning they’re achieved or not – yes / no. Did you fill out the paperwork, transfer the initial money, and thus open a Roth IRA? When you log into the account and see that amount sitting there, you’ll be able to check off that, yes, it was done, or no, you still have a few steps left to do.

Action-Oriented: What – within your control – will you DO to achieve it? e.g. I will save $334 per month, using auto-transfer from checking to savings. Achieving your goals requires sacrifice. Nothing worth having will simply be handed to you. If a goal is important and meaningful, it will extract payment from you, in the form of time, energy, money, sticktoitiveness, whatever is necessary. In this case, you need to a) have the account open, b) set up the auto-transfer, and c) make sure on a monthly basis you’ve got enough cash on hand to successfully do the transfer and not miss payment on anything else. Wishing to be debt free, to have $___ in the bank, to feel secure knowing that if I pass away, my tribe will be ok, are fine wishes, but lousy goals. Paying down debt, putting by savings, and buying that life insurance policy – THAT’s where the action is.
Accountable: Who will help keep you responsible for completing this goal? e.g. My best friend. When you become accountable to someone other than yourself, you’re much more likely to see your commitment through to the end. That person should understand what you’re trying to do, and have no qualms about being a nudge, the person to give you a loving kick in the pants, when you need it. It could be a relative, a close friend, a sponsor, you pick. It could also be a more formal arrangement – like with a savings group or financial coach – where you’re putting money down, investing in accountability, because the goal is THAT important to you. The point here is, when we know we’re not alone in this, we’re more likely to put in the required effort, in part because we don’t want to let the other person down.

Realistic: Is the goal feasible? e.g. If I reduce my eating out expense of $500/mo., then yes. Here you’ve identified that you’ve got $500 of discretionary spending going on and maybe it doesn’t need to be that high. With some planning and intention, you start cooking at home, reducing the cost of social activities that revolve around food (going for ice cream, rather than full meals), and eating left-overs for lunch. This still leaves $166 for eating out (if I’m saving $334 each month). That means I’ll still be able to enjoy a couple meals, but I’ll need to be choosy and decide which are most important. What may actually happen is that by being conscientious in my decisions, I end up deriving MORE value from the times I eat out, AND I feel good because I’m on track to buy the car I want. But beyond this, it’s realistic. I’m not depriving myself by saying I won’t eat out at all. I will; just not as much. And it’s realistic because I can see that the money to achieve the goal is there and simply needs to be reallocated from a use with lesser value to a goal of higher value. (This is the true “payment”, and the definition of “sacrifice”.) If I only made $1,000/mo and wanted to save 33.4% of it, I’d better have some pretty low living expenses; otherwise, that isn’t realistic. Being realistic is relative: saving $334/mo is easy for some people and totally not happening for others, for very practical reasons, regardless of how much desire they may have. So to determine if a goal is realistic (or rather, if the process by which I aim to achieve it is realistic), will require some research to determine what my status is right now, what’s do-able, where I can find some wiggle room, etc.

Relevant: Why is it applicable to your life? e.g. Because next year, I’m gonna need wheels to get to work. If it’s a goal, it’s gotta be worth having. Just saving money isn’t particularly fun. But if having money saved is going to provide your family with an amazing vacation, fully restful nights, or the chance to shed the golden handcuffs and start your own business that contributes to the community, then achieving your particular goal will lead to the fulfillment of something much grander, or practical. Having a decent car when you have none, or when the one you have breaks down at the worst possible times, can be a game changer, allowing you to focus on bringing your best to others. The point of relevance is to make sure that this goal is yours (and not just something someone said you should have), that it will directly help lead you to the life you want.

Time-Bound: By when will the goal be achieved? e.g. I will have the $4,000 within the next 12 months… so that’s by December 31, 2021. It’s important to bring some measurable specificity to here too. If we set time boundaries for the achievement of the goal, it immediately creates a stronger sense of urgency to start work on it promptly. I encourage you to have it down to a specific date, to make it clear by when the goal has to be completed. By “next year” is lousy and WAY too indefinite – you have 365 days to choose from and chances are good that NONE of them will see the goal’s completion. By “_ month” is better, but are you meaning at the beginning, middle, or end of the month? If you’re saving money and counting the number of paychecks you’ll have to draw from for saving, then depending on the time of the month, you might have one or two extra paychecks with which to work. In measuring how much time you need, and reasonable amounts to save each month, then not knowing when in the month you want to be finished will mess with your calculations. Nail it down to a specific date – include an hour and minute if you need to! – and you’ll intuitively know that this time, you mean business and your goal’s for real.

When incorporating all the S.M.A.R.T. elements together, it can be helpful to think of it like some sort of mad Goal-o-Matic machine with levers and knobs. If you increase the time, then the amount of the monthly payment to the goal will decrease. Conversely, if you increase the monthly payment amounts, the length of time to achieve the goal will shorten. If the amount of time is fixed, and there’s only so much you can contribute each month, you’ll need to then adjust your expectations for total goal amount, perhaps making it more modest, at least in the short-term. In the end, it will take some playing around with the numbers to get it all to fit in a way that’s doable.

Once you’ve gotten all the components hammered out, you then write your goal as a single sentence or two, and then put it in places that will help keep it front and center in your life (bathroom mirror, front door, on your computer monitor, etc.) and share it with your accountability partner. If you were starting on January 1, 2021, the goal should read something like: By December 31, 2021, I will have saved $4,000 in my bank account by transferring $334/mo., for the purpose of buying a used car. I will achieve this by reducing the amount I spend eating out.

At this point, you’ve now got your plan in hand. What’s next? To go forth into the arena of action and put it into motion.

This book is a work in progress and we’ll all benefit from your input and collaboration. In the “Leave a Reply” below, please post examples, comments, questions, and needed edits. By posting, you grant permission for inclusion of any content to become part of the book, now or in the future, in whatever form it may take. I’ll give attributions to the extent possible. I know sharing about our financial lives can be sensitive, so if you want to share anonymously, please use the contact form instead and I’ll honor your request.

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