Setting SMART Financial Goals- Your Guide to Financial Freedom



Everyone has financial goals even though we don’t really call them as “goals”. When asked what their financial goals are, most people tend to keep it simple by replying that they just want to become rich. That’s it, period. For example, if you want to buy a new laptop, a new house or renovate your old one, would you able to do them all if your primary goal was to save money and become rich?

So becoming rich is not a smart financial goal. It is just a wish or a desire of the heart. Smart financial goals would enable you to not only become rich but will also help you to accomplish your other necessities. S.M.A.R.T stands for Specific, Measurable, Adjustable, Realistic and Time- Based. Let’s see what all these terms mean.


As mentioned before, becoming rich is NOT a goal. A goal is supposed to be powerful, and it should be set in such a way that you can focus on it completely. For that, it should be specific. A goal can be made specific if you ask yourself questions such as:

  • For whom is this goal?
  • Why do you need to accomplish this goal?
  • What is it that you need to achieve precisely?
  • When will the goal materialize?
  • What are the necessities and conditions to achieve it?

An example will be “ increase investments by ₨. 25,000 per month to have a capital of ₨. 1 crore within 15 years” which is more specific than “become rich in 15 years”.


Instead of having a vague far-sighted goal, try to have a goal that is measurable. As you are working towards a goal, you will feel good by knowing how much you’ve achieved this far. To know this, it is imperative that it should be divided into different timelines so that you can monitor your progress and give yourself a treat whenever a specific milestone is achieved. This will encourage you to do even better in the future and will not let you deviate from your goal.

It can be explained by giving you an example of buying things from a grocery store. You would make a list of things you want to buy and check those items off one by one when you buy them, and finally, you get all the things you wanted. Do the same while setting your financial goal.

For example, you are planning to go on a family vacation, and you figure out that you need to save ₨.10,000 so that you can afford it by the end of next December. This means your goal is measurable. You can monitor how much you have saved up and how much you need to, and also you can ease up on your savings if you are ahead of your short-term goals which can turn out to be very useful.


Most people make the mistake of setting goals that are inelastic, i.e. which can be destroyed by some unprecedented events or can be pulled off-course by them discouraging the goal-setter. Such goals must be avoided at all costs, and moreover, it is unnecessary. There is a common misunderstanding that goals are meant to be won or lost. This is not true. Goals are just goals. You can achieve 100%, 50% or 25% of your goal or make it possible early or late. If the things are going according to the plan, you’re doing a good job.

The important thing to remember is that you’re working towards your goal and if something comes up along the way, you should not get stressed out. For this, you need to set goals that are adjustable.

To explain this, imagine you’ve started saving up for your retirement, and suddenly recession hits resulting in you losing your job. And also you’ve depleted your contingency funds. When this happens, you can dip into your retirement savings until you get another job. If you insist on achieving the retirement goals, you won’t reach anywhere. You can adjust on your retirement goal because it is flexible and save up again when you get another job.


It is important that your goal must be realistic. You are not a child to have goals such as becoming an astronaut or walking the moon or becoming the next Bill Gates. Remember that we are an achieving generation, not a dreaming one. We need to feed our families, do well in our careers, have fun with friends, buy new stuff, travel to holiday destinations, etc.

Let your financial goals be realistic. If your goals are just a list of your heart’s wishes, you might be disappointed after you find them unachievable. Know your significances, understand your capabilities and limitations, and stretch yourself until you achieve the realistic goal. Never take risks where you cannot afford to and always remember that money is just a means to an end, not an end in itself.


Although it is imperative that your goal must be specific, adjustable and realistic, it should be kept in mind that for it to be measurable, it must be time-based. Different timelines must be assigned for different steps to achieve the goal. Setting a goal to buy a car is not specifically time-based, a goal to buy it in a period of say 17 months is more measurable. If you know the total price of the car, knowing how much to save up each month becomes a simple math problem.

With no time-frame, it’s like walking in the dark without knowing what to do and where to go.


Setting goals will give you an insight of yourself and what you can achieve. You will see your dreams and aspirations come into reality by taking small steps towards them. And setting S.M.A.R.T goals will help you to discriminate real needs from daydreams.

More importantly, goals act as a conscience. When you’re in a shop to buy something, they can help you determine whether they fit in your savings plan or whether it helps you to take you closer to your ultimate goal. S.M.A.R.T goals help you to take decisions with full financial awareness.


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