smart financial goals

Are Your Financial Goals SMART

Are your financial goals SMART ??

Do you know success of goals achievement increase if they are SMART.

So what are SMART financial goals and how to construct them.

Read on.

What are Financial Goals


 Everybody has some dreams which they want to achieve in their living life, it can be buying an expensive car or that 4 BHK flat or world tour with family also marriage and education of children. All the goals require money to be materialized, and these then turn to financial goals.

Financial goals are personal big picture objectives one set for himself, which in turn defines how he save and spend his money. There isn’t one formula that fits all, as everyone has different priorities and lifestyles. These goals can further be divided into short term, medium-term and long term goals.

Diving goals under these sub-heads is a good start for smart financial planning. The goals and time frame to achieve them may be different from individual to individual. A Long term goal for one might be short or medium for other and vice versa.

Short Term Goals are goals that one wants to achieve in the next 1-3 years. These generally involve small financial outlay (4-5 Months of salary). Examples for short term goals is Jewellery, International tour etc.

Medium-term goals are goals that one wants to achieve in the next 3-5 years. These generally have higher financial outlay and sometimes range from 12-15 months of salary/income. Examples of medium-term goals are buying new cars, Child education, etc.

Long term goals are ultimate goals and are generally once in lifetime goals, like retirement, child marriage. These generally have higher outlays and require 6-8 yrs of annual income.

Why Financial Goals Are Important

Setting financial goals helps you to keep the big picture in mind rather than getting bogged down by day-to-day expenses. It gives a reason to save and keep a track of the investment. In addition, it also helps to avoid those impulse purchases on non-essential. For example, if you have set to add 5000 every month to gift yourself a new phone as New year gift, know, it’s easy to forgo that smart band or wallet that you really don’t need. It also gives an opportunity to review the goals half-yearly or annually and judge the progress. In case you have never set goals it would give you an opportunity to pen down and keep adding for the same. As it said its never too late, all that’s required is discipline.

What are parameters of SMART financial goals


Whether you aim to buy a car in the next 4 years or house in the next 10 years or maybe hi-fi electronic gadget next year, learning SMART goals will ensure to achieve the objective in a set time frame. SMART goals are goals with more clarity, trackability, and objectivity. SMART is an acronym that stands for Specific, Measurable, Attainable, Relevant, and Time-bound.


The stress is on the need for a specific goal rather than a more general one. This means goals need to be clear and unambiguous without any whims & clichés . for example instead of saying “I want to buy a luxury car” you might say, “I want to buy BWM 320.” The more narrow your goal, the more you’ll understand the steps necessary to achieve it.

In short SMART financial goals tries to answer 4 W’s

What – What exactly you want to accomplish, for example, you may say I want to own BMW.

Why – it answers purpose of your what, so maybe you want BMW for social status

Where – it answers where you’ll be working for this goal , like you may say you would increase SIP specific for this goal

Who – who else is involved with you in this goal. You may say that your spouse would equally help in building assets to purchase the BMW.


The criterion stresses the to measuring progress toward the attainment of the goal. The very thought behind this is that if a goal is not measurable it is not possible to know progress toward successful completion. The question that needs to be answered is “how much is required” eg: how much money is required to buy BMW 320. Setting the exact number gives a target to move for. Comparing the target number with the current position shows clear progress.


The goal should be attainable. Goals should be within reach else they would should meaningless and imaginary. The progress toward these goals would be easily visible and would add motivation to move for them. So a goal to buy Maybach 62 worth 10 crores is not achievable considering the present situation.


When setting goals, you need to answer whether or not they are relevant. Each of your goals should align with values and larger, long-term goals. If a goal doesn’t contribute toward broader objectives, you might rethink it. You need to ask why the goal is important, how achieving it will help you and how it will contribute toward your long-term goals.

Time Bound

The stresses is on the importance of grounding goals within a time-frame, giving them a target date or time. A commitment with a deadline helps individuals completing the goal on or before the due date. This part of the SMART goal criteria is intended to prevent goals from being overtaken by the day-to-day crises. A time-bound goal establishes a sense of urgency. eg buying BMW 320 in April 2022.

Example: Buying BMW


The simple goal of “Buying BMW” is a great one, but it’s not a SMART one. How can you turn it into a SMART goal?

Specific: I shall be buying BMW 320 in April 2022
Measurable: The car shall cost 37 Lacs.
Attainable: Current investment for goal is 10 lacs, I have placed an additional SIP of 45000 in balance fund expecting to earn a 12% return.

Realistic: I am currently using Ford Endeavour and my present income permits to go for BMW.
Time-limited I have attached a fixed time frame, i.e April 2022.

Your goal of “Buying BMW” just became a specific, measurable, attainable, realistic, and time-limited goal. You can measure your progress along the way and know that you put in the work in advance to ensure that this goal can actually work if you put in realistic amounts of effort.

Drawbacks of SMART Financial Plan


Goals not smart leads to various plights. Main of them can be clubbed as:

Cancellation of Goal:

There are high chances of cancellation of goals if they are not followed in a SMART way. The individual needs to have the desired sum of money on the specific pre-decided day, a shortfall in the fund in high probability would lead to cancellation of Goal.

Postponement of Goal

Another option is to delay the goal by a few months or few years. That’s also with the commitment that strict norms would be followed. A Goal can be postponed for once or at the most twice. Post that the goal gets out of the list.

Compromising on Goal

So you have promised yourself of BMW 320 in April 2022, what if on that day you shortfall of 20-25% of the required fund. You not in a position to cancel or postpone. You ought to settle for Octavia or Honda. Honestly, that’s what not you saved for.

Steps for setting financial goals: Here are six steps to setting financial goals.

  1. Figure out what matters to you.
  2. Sort out what’s within reach.
  3. Apply a SMART- goal strategy.
  4. Create a realistic budget.
  5. In case of any money left, have it automatically directed into a separate account designed to address the first couple of things on your list of priorities or keep as an emergency reserve.
  6. Monitor your progress. This should be done every 6 months or yearly.



Above all else, the purpose of SMART goals is to make you think about goals before you sign off on them. If you dive right into a goal without proper planning and taking stock of your current financial position you are sure to increase the probability of failure. The concept of SMART refines your goals.

If you’re struggling with some of your goals, in your own life, try applying the SMART framework. You might just find that the big scary goal that once seems to be isn’t quite as big and scary as you once thought it was.

SMART just make movement toward goal and goal achievement smooth and comfortable

[bctt tweet="Goals are dream with deadlines."]

Successful Investors have smart goals, do read – 10 habits of a successful investor.

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