Setting SMART Goals
By Carlos Gonzales, MoneySense magazine | 01/05/2009 4:29 PM
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A 1979 survey of 1,000 graduating Harvard students revealed that 84 percent had no defined goals. About 13 percent had goals, but they weren’t in writing. Only 3 percent had written goals. After 10 years, the same students were surveyed again. The 13 percent who had goals, but not in writing, earned twice as much on average as the students without a plan. But the 3 percent who had written goals earned, on average, 10 times more than the other 97 percent without written goals.
Putting your goals into writing takes you one step beyond just day-dreaming or wishful thinking. But to be effective, you should be writing down SMART goals. SMART stands for the following:
Specific. A goal like “to travel abroad” or “to retire comfortably” is not useful. Where do you want to travel? How much would you need? When do you want to retire? What do you mean by comfortable? Be very specific and detailed about your goals.
Measurable. Most of your goals have a monetary value. You will know you can achieve your life goals if you attach money goals (which can be measured) to them. That way, you can track how near or far you are in achieving them. So instead of writing “to travel to Europe,” find out how much it would cost to go on a European tour and write “to travel to Europe on a 15-day package that costs $2,000.”
Attainable. Some say “A” stands for “Agreed Upon” or “Acceptable.” If you’re sharing your goals with your partner, then it’s important that you both agree to them. But “A” also stands for “Attainable,” meaning you know your goals can be done.
Realistic. Your goals may be attainable but if you have set plans that require more than you are able to do, then they are not realistic. For instance, becoming a millionaire is attainable, but if you’re working from scratch, becoming one next week is not realistic.
Time-specific. Set a specific date for each of your goals. Don’t use words like “in the future,” “some day,” “when I’m old,” “after I retire,” or “soon.” Set a year, a month, or even a day. Don’t write “buy a Honda Accord next year.” Write “buy a brand new P1.45 million Honda CR-V 2.4Li 4WD S-X this January 2009.”
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This article is from is MoneySense, the country's first and only personal finance magazine. You can read more financial tips and stories at www.moneysense.com.ph.
