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Setting SMART New Years Resolutions

Posted By Jim On 12/30/2009 @ 12:47 pm In Personal Finance | 27 Comments

As 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.

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