Managing finances is a task that’s not to be taken lightly; millennial or otherwise. Budgeting is not second nature to some people and it can be hard to start when you don’t know where to begin. Let’s discuss how you can apply the SMART system in conquering the indomitable task of managing your money and reaching your financial goals.

Specific

Measurable

Achievable

Realistic

Timely

SPECIFIC

You must set a clear, well-defined, and distinct financial goal, be it short-term or long-term. For you to set a specific goal, you must define the Who, What, When, Where, and Why. Instead of “I want to buy a car”, your goal must be:

“I want to save PHP800,000 in 3 years in my ABC bank account so I can buy a car”.

MEASURABLE

You need to have criteria that will help you determine if you are progressing towards your goal. It is not enough to have a specific objective; you also need to measure your progression towards it. Touch-base with yourself and ask if you have made progress and are doing it in a timely manner. In the example, you need to set checkpoints within your timeline to see your advancement.

“I want to save PHP800,000 in 3 years in my ABC bank account so I can buy a car. I need to set aside approximately PHP5,600 per week or PHP22,400 per month.”

ACHIEVABLE

Setting a goal that is feasible is key. On top of giving yourself a definite timeline and doing a progress check, setting an attainable goal will help you determine what you need to do to reach it (for example, go over your resources, find a better paying job, research on other means to make money on the side, etc.).

“I want to save PHP800,000 in 3 years in my ABC bank account so I can buy a car. I need to set aside approximately PHP5,600 per week or PHP22,400 per month. In order for me to save that amount of money weekly/monthly, I need to look for side hustle to supplement what I am earning from my 9 to 5 job”.

REALISTIC

Is your goal realistic? If your goal is achievable given the time and resources that you have then it is (realistic). Commitment to your goal and progression towards it is the most important factor. Without it, your initial efforts will all be in vain. In our example, you should have already considered all your other expenditures and responsibilities before aiming for that car.

“I want to save PHP800,000 in 3 years in my ABC bank account so I can buy a car. I need to set aside approximately PHP5,600 per week or PHP22,400 per month. In order for me to save that amount of money weekly/monthly, I need to look for side hustle to supplement what I am earning from my 9 to 5 job since I live off 80% of my current monthly income.”

TIMELY

To add on to creating a specific goal, you need to highlight the importance of a timeline. A definitive start and end-date wherein you need to achieve your financial goal. Having a deadline will motivate you to stay focused and keep a sense of urgency. This will never happen if your goals are vague.

“I want to save PHP800,000 in 3 years in my ABC bank account so I can buy a car. I need to set aside approximately PHP5,600 per week or PHP22,400 per month. In order for me to save that amount of money weekly/monthly, I need to look for side hustle to supplement what I am earning from my 9 to 5 job since I live off 80% of my current monthly income. If I start by March 2023, I will have reached my goal of PHP800,000 by March 2026”.

Having vague and ambiguous goals with no time-constraints is setting up one’s self for failure. In conclusion, it is crucial that financial goal-setting must be organized, forward-moving, and attainable.