If you spend time on social media, there is a chance that you might have stumbled on one of those “How old were you when you saved your first million” videos. One thing those videos have in common is the number of “God when” and “you people are saving millions in this economy” that you will find in the comments section.
Saving your first million or even your first N100k is not luck; it’s about setting SMART financial goals and having a well-thought-out plan to reach them.
In this blog post, we’ll break down the SMART goal-setting process and guide you through how it can improve your finances.
The Power of SMART Financial Goals
Imagine you’re planning a road trip. You wouldn’t just get in your car and start driving “as the spirit leads”. You’d have a destination in mind and plan out what the journey is going to look like. SMART financial goals work the same way. They give your financial journey direction and purpose. But what exactly are SMART goals?
– S: Specific
– M: Measurable
– A: Achievable
– R: Relevant
– T: Time-bound
Specific: Your goal should be clear and well-defined. Instead of saying, “I want to save money,” say, “I want to save ₦500,000 by December 2023 to start an emergency fund.”
Measurable: Your goal should be quantifiable. How will you measure your progress? In the example above, you can track your savings account balance to make sure you reach ₦500,000 by the intended date.
Achievable: While it’s great to dream big, your goals should also be realistic. Starting with a smaller emergency fund goal and gradually increasing it may be more realistic if you are a savings beginner.
Relevant: Your goal should fit into the overall goal you have for your financial life. For instance, saving for an emergency fund is important because it helps secure your financial future.
Time-bound: Set a deadline for achieving your goal. In our example, it’s “by December 2023.” This adds a sense of urgency and helps you stay on track.
How to Set SMART Financial Goals
- Reflect on Your Financial Situation: Begin by evaluating your current financial status, including income, expenses, debts, and savings.
- Identify Your Priorities: What are your financial priorities? Is it building an emergency fund, paying off debts, saving for rent, or investing for retirement? Choose goals that matter most to you.
- Make Your Goals Specific: Clearly define your goals. If it’s saving, decide how much and for what purpose. If it’s investing, specify the type of investment and target returns.
- Break It Down: If your goal seems overwhelming, break it into smaller and more realistic milestones. For instance, if you want to save ₦100,000, start with ₦10,000 increments.
- Set Deadlines: Establish realistic deadlines for each goal.
- Create a Budget: Develop a budget that aligns with your SMART goals.
Also read: Budgeting with Ease: The 50-30-20 Rule and How To Apply It
- Monitor Progress: Always keep track of your progress and adjust your budget when necessary..
- Stay Accountable: Share your goals with a trusted friend or family member who can help hold you accountable.
- Automate Savings: Set up automatic transfers to your savings accounts to increase consistency.
Remember, setting SMART financial goals is just the beginning. Consistency and discipline are the actual strategies that will move you away from the “God when” crew.
