Personal Finance 

Setting SMART New Years Resolutions

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Setting GoalsAs we near the eve of the New Year, many people’s minds start to wander towards setting some New Year’s Resolutions. You plan to save a little more out of your paycheck or lose a few of the pounds you gained the last few weeks. This might be the year to quit smoking or drink less. Or perhaps you just want to work less, enjoy more life and spend more time with family and friends. Whatever the case may be, the key to keeping your New Year’s Resolution lies in the basics of goal setting.

When it comes to goals, it pays to be SMART.


SMART is a mnemonic many people use to help them set goals. SMART stands for:

  • Specific – Be as specific as possible as to what you want to accomplish. “Spend more time with friends” is not specific and too easy to abandon because you don’t know when you’ve reached that goal.
  • Measurable – If you can measure it then you’ll be able to track your progress. If you can track your progress, you’ll know when you’ve achieved it or how far close you are.
  • Attainable – You can’t run a race unless you know when it ends right? It has to be an attainable goal otherwise it’s too easy to give up. You don’t want it to be easy to achieve, but you don’t want to put it out of reach.
  • Realistic – This pairs with attainable because you don’t want to set such an auspicious goal that it’s impossible to achieve. You can adjust it based on your progress but you can’t shoot for the next galaxy at the start (the moon is OK though).
  • Timely – Everything needs a bound. If you have no sense of when it needs to be achieved, then it can always wait until tomorrow. Or the next day. Or next year.

A Financial Example

Let’s say you haven’t saved enough and though you dodged the bullet this last year, through the worst recession in recent memory, you really want to “save more” next year. How do we turn that into a SMART goal?

Be specific by setting an actual dollar amount. If you have no emergency fund, that’s a great place to start. Your goal should be to save up six months of expenses within the next year. Now your goal is measurable because you can see your savings grow and see your progress. If you get ahead, you can decide to go full throttle or slow down.

Is it attainable and realistic? Let’s say you need to save up $6,000 (just a random number, you have to do the math for yourself) in 12 months, do you have $500 a month available in your monthly budget? If you do, then it’s realistic and attainable. How about $600? Then you can reach your goal in 10 months. Finally, that deadline and the monthly milestones make the goal timely.

So when you go to set your resolutions for the year, be smart about it. 🙂

(Photo: lululemonathletica)

{ 27 comments, please add your thoughts now! }

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27 Responses to “Setting SMART New Years Resolutions”

  1. mannymacho says:

    Since attainable and realistic are so similar, I have seen the “a” stand for “aligned” which shows that the goal is aligned with your overall values.

  2. BrianC says:

    Excellent advice. I’ve found that the more specific I am in the definition of a goal and what exactly needs to be completed to see that goal as “done,” the easier it is to accomplish.

  3. aua868s says:

    i have at last decided to open up a brokerage account and start investing

  4. I love that you take people past setting “New Year’s Resolutions” to setting real goals. Resolutions are often nothing more than good intentions and sweet thoughts. Goals have specifics behind them. They are not just an outcome but if done right, also the how.

    I am not a fan of SMART. I believe this is more complicated than it needs to be, which then becomes a barrier for people doing it. I believe MT is enough. I explain further, along with offering a free template for goal setting, on my blog post today:

  5. Izalot says:

    Well, I like Jamie’s point to keep it simple but the SMART acronym makes sense to me and obviously easy to remember.

  6. Izalot,

    If you’re already using SMART effectively and have no problem remembering it, then that’s great. I have no problem with that. However, I’ve even seen people write articles or blog posts about it and they get the specific words wrong, or don’t actually spend the time testing for each letter, in which case it serves no purpose.

    If it’s measurable, it’s going to be specific. So that’s not a problem.

    Attainable I think is a struggle. How do you know? If you wrote a goal to learn how to beam yourself across the room, unless you are a particle physicist who actually had a shot at it, then it’s not very attainable. But as far as goals that are just out of reach because of some barriers, how will we really know that? We don’t until we try.

    Relevant – well, if you’re writing irrelevant goals and need a reminder to not do that, then we have bigger problems.

    That’s why I believe Measurable and Time-bound are the only two you really need.

  7. The same list every year? That’s what I’m used to. Only 10% success ration I’m afraid.

    John DeFlumeri Jr.

  8. Safeway_Sage says:

    I use the Deming cycle. I use it at work, so I am familiar with the structure.

    PDSA = Plan, Do, Study, Act.

    But, I guess any plan is better than NO plan right?

    Happy new year!


  9. ziglet19 says:

    I’ve never considered that goals should have each of these components, thanks for the post!

  10. lostAnnfound says:

    Thanks for a relevant article for this time of year. I think Realistic is very important. Goals can often fail because we set our sights too high instead of shooting for something realistic, attaining that goal, and then moving onto another one.

  11. eric says:

    Not much of a resolution type person so I’ll be skipping them this year. Good luck to others!

  12. Great way to put it, I’m 20 and just starting to set goals. I have been finding the goals weren’t attainable in my time frame. Definitely implementing “SMART” when I’m setting up my monthly goals. Thanks again!!


  13. Donald says:

    You said, ” I plan on taking half of our emergency fund and committing it to the stock market in individual company holdings.”

    Am I missing something? Why would you spend your emergency fund after working so hard to build it up? You go on to further state that, “We will invest half of the fund over the next six months in individual stocks and then replenish the emergency fund with income as the months pass.”

    This almost seems like a get rich quickly scheme. Why would you not advocate preserving your emergency fund and using current income surpluses to invest in the stock market?

    I must be missing something.

    • Jim says:

      My ears always perk up when I hear “get rich quick,” I don’t see how that applies in this case.

      As for decision to take half of the fund vs. income surpluses, I opted for the former because it affords me greater flexibility. Our emergency fund can cover a year of expenses, which means half will cover six. So in the event of a loss, I have six months of coverage and as the months pass I can boost that back up to six. Given that time frame, I thought I had enough of a cushion to take half and start investing today. If I waited to use surpluses, I’d have to wait a little bit longer to start investing because of sales commissions.

      Hopefully that explanation was a little better?

  14. jsbrendog says:

    resolution = actually go on vacation this year without emptying my bank account

  15. sanford says:



  16. matk54 says:

    Found this article very helpful and have actually printed it so that as I finalize my goals I remember to be SMART.


  17. Shock says:

    My company uses the SMART acronym for setting our annual performance goals. Thanks for mixing business with pleasure. Great way to start the new year off right!

  18. Eve says:

    “If you don’t plan the hunt, you are just taking a walk in the woods.”, as my illustrious broker used to say. Thanks for the motivation!

  19. Soccer9040 says:

    SMART is just too easy to remember. Thats why it is so powerful.

  20. Mike says:

    The “R” could be restated as “review or research” …what have others done that has worked? If somebody has done something that has been successful, why not borrow upon that success. There’s no need to reinvent the wheel by using successful ideas that can help achieve the goal(s).

    • fishboyridesagain says:

      R could also stand for “relevant” – the reminder that a goal should lead to an ultimate value or core principle. The M can be used in the short term, while the R in “relevant” could direct for the long term or following up after the short term goal is achieved.

      I have my fitness goals for the year, but how much I run or exercise this year is not my final destination. My fitness relates to 3 core values: My performance at work and other places where I serve, family relationships in the present (being active as a family, keeping up with the kids, etc.), and most importantly my family relationships in the future (excercise being the most important factor I can choose to increase the chance of a long life and fewer health expenditures.)

  21. fishboyridesagain says:

    These are the steps I’ve turned to in goal setting, but somehow I’ve never come across the acronym. Deadlines to me are the most important factor. When a goal changes from “I am going to work on this for a while” to “I will complete this by [designated time frame]” our success rates balloon.

  22. fishboyridesagain says:


    I checked out your template and I was disappointed. I’m not sure how your goal scheme is any simpler than SMART, and SMART has the benefit of being easy to remember.

    Additionally, I don’t think you should undervalue the S. Being specific is good advice for everyone, and not just in New Year’s resolutions. We all have to plan at work and at home. I teach science writing and I always have to remind students to be specific. As writers (those who post, who comment, blog, etc.) we all benefit from being specific. How many times do we see comments reminding us that the post wasn’t quite clear? Why not have a reminder to be specific?

    Anyway. A and R may also have their arguments, but I think I have a good enough argument with S that M and T are not the complete process.

  23. Fishboy (whatever that is?),

    I didn’t say it was simpler. But it is structured. They are actual questions that turn into plans. Just writing the goal isn’t enough, whether it’s SMART or MT. There is still more work to do. Those are the questions you need to start asking to go beyond just a goal.

    And if you use successfully SMART goals, then that’s fine, as I’ve said many times now. The thing is, 95% of the people I test that say they use SMART goals actually do not. Many don’t remember actually what they stand for. I don’t try to remember. That’s why I use a template.

    And I think R has no argument. If you need an acronym to remember to write a Relevant goal, then goals aren’t going to save you.

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