Advertiser Disclosure

The offers that appear on OpenCashAdvance.com are from companies from which OpenCashAdvance.com receives compensation. OpenCashAdvance.com does not make loan offers, but instead pairs potential borrowers with lenders and lending partners. We are not a lender, do not make credit decisions, broker loans, or make short-term cash loans. We also do not charge fees to potential borrowers for our services and do not represent or endorse any particular participating lender or lending partner, service, or product. Submitting a request allows us to refer you to third party lenders and lending partners and does not constitute approval for a loan.

Best Practices

Setting S.M.A.R.T. Financial Goals

Date Published: Dec 27, 2022
Jim Hughes, editor at OpenCashAdvance.com
Sophia Rodriguez, reviewer at OpenCashAdvance.com
Listen minutes

                      “Setting goals is the first step in turning the invisible into the visible.”

                                                                        Tony Robbins, American author, speaker, and coach                                                                                                     

Financial goals represent the big-picture objectives you set for managing your finances. They refer to both long-term, mid-term, and short-term targets you want to achieve down the road. For example, you might want to pay off your debts, save for retirement, or build an emergency fund. 

More specifically, goal setting is a psychological tool that involves five criteria. Namely, it helps you increase productivity and achieve financial independence. And whatever goal you set, it should be Specific, Measurable, Achievable, Realistic, and Time-Based (SMART). 

George T. Doran, a consultant and former Director of Corporate Planning for Washington Water and Power Company, proposed the term in 1981. HubSpot, the worldwide leader in inbound marketing, updated these goals to be Specific, Measurable, Attainable, Relevant, and Time-Bound. 

It discusses the tried-and-true advice of setting SMART financial goals, developing SMART financial plans, and using them as practical strategies.

Set Specific Financial Goals

As Benjamin Franklin said, “If you fail to plan, you’re planning to fail.” First, a SMART financial goal should be specific. Setting detailed goals helps you figure out the path between where you are and where you want to be. For example, this might refer to paying off your credit card debt in full.

Close up on journal with a list of financial goalsNamely, specificity provides a clear understanding of your current financial situation and narrows down your next steps, enabling you to reach your goals more quickly. Start by determining what you want, how much you want, and what actions you need to take to accomplish the goal. Then, choose a reason for that. 

Answer these questions:

  • What is my specific financial goal? 
  • What exactly do I want to achieve? 
  • Why is it important to achieve?
  • Why do I want it?
  • Who needs to be involved in reaching this financial? goal?

Set Measurable Goals 

To succeed, you should attach a number to your goal to make it measurable. Unfortunately, a 2020 Intuit Survey shows that over 60% of the respondents had no idea how much money they spent the previous month. 

As a result, setting numbers for your goals helps you track your progress and measure your success. Specifically, a numerical goal gives you a definitive target to strive toward. 

Answer these questions:

  • How much?
  • How many?
  • What are my progress indicators?
  • How do I know whether I’m on track?

Set Achievable Goals 

A SMART financial goal should also be achievable and action-oriented. Specifically, this means you should know what particular steps to take to achieve your goal. Start by looking at what you’ve already accomplished. As a result, small gains will encourage you to achieve more and be more realistic about your future steps. 

In addition, track your spending and create a budget to determine which goals you are most likely to achieve. To track your costs, you need to categorize them. Specifically, expenses can be fixed or variable. As a rule, fixed expenses, such as debt payments, mortgage, and rent, don’t change monthly. On the other hand, variable expenses, such as clothing, food, and travel expenses, vary each month. 

To create a budget, try the well-known 50/30/20 budget rule to maximize your funds. Specifically, this means spending roughly 50% of your after-tax salary on necessities, 30% on wants, and 20% on savings and debt repayment.

Answer these questions:

  • Is this goal doable?
  • Is my action plan reasonable? 
  • What tangible steps should I take to reach my goal?
  • Which tools and skills should I have to reach my target?
  • Do I have the necessary tools and skills?
  • What habits should I change?

Set Realistic Goals 

Setting realistic goals helps you take your bandwidth into account. These are the goals you can achieve with your current skills, abilities, mindset, timeframe, and motivation level. Specifically, be confident that you can accomplish them. Unlike vague or easy goals, specific and complex goals lead to better performance.

Answer these questions:

  • Is this goal worthy enough?
  • Is it the right time to work on achieving this goal?
  • Does the current social and economic environment create problems for it?
  • Are my goal and action plan affordable?
  • Are my expectations reasonable?

As Richard Hansen, a Canadian athlete, activist, and philanthropist, said, “The goal you set must be challenging. At the same time, it should be realistic and attainable, not impossible to reach. It should be challenging enough to make you stretch but not so far that you break.”

Set Time-Based Goals 

Have a target end date for when you want to accomplish your goal. Specifically, a timeline lets you track your progress toward your target and keeps you focused. 

Start by looking at all your objectives. Next, choose goals to accomplish within one year (short-term), one to five years (mid-term), and over five years (long-term). Finally, determine a monthly budget for the accomplishment of these goals. 

Close up on individual making monthly family budget Importantly, track your efforts to make sure your goals fit into your everyday life. Specifically, write down your progress at the end of each month. As a result, you can understand whether you need to make any changes or adjustments to forge ahead. 

Answer these questions: 

  • When will I achieve my goal?
  • What can I accomplish today?
  • What can I achieve within six months?
  • What milestones can I set?

As a financial planner and investment educator Charles J. Givens said, “Success is the progressive, timely achievement of your stated goals.”

Examples of SMART Financial Goals

Each element of a SMART financial goal is vital to mapping out a clear plan for reaching your objectives. Specifically, you can use SMART goal templates to make things easier. And what are examples of SMART financial goals?

For instance, you may set a specific goal of paying off your credit card debt in full. Next, to make it measurable, you can aim to pay off any credit card debt in full. Then, you can automate the debt repayment process to make your target achievable. 

In addition, your goal can be realistic if you build your budget around the amount you must pay each month by cutting your entertainment expenses. For example, some may be able to put aside $200 (plus interest) each month to make a larger credit card payment.

Finally, determine a 15-month timeframe for your target so you can reduce your debt down to zero. 

So, the SMART goal will be to pay off your credit card debt in 15 months. In our example, this would be done by putting $200 each month (plus interest) towards it. Some may be able to reach this target by cutting their entertainment budget and stopping credit card usage in the meantime.

Another example is setting a specific goal of creating a monthly budget for an emergency fund. Next, you can aim to create a $7,000 emergency fund to make it measurable. 

In addition, to make your target achievable, you can use a budgeting method like the 50/30/20 rule mentioned above to free up $300 each month for your emergency fund. 

As for being realistic about your goal, calculate your expenses to see whether you have money to free up monthly. If you’re making ends meet and have no money to save each month, this goal can’t be realistic for you. However, if you can find areas to cut back in, then your goal will likely be realistic.

Finally, you may achieve your target faster by freeing up $300 a month. And this makes your goal timely. 

SMART Goals for Financial Planning 

Proper financial planning starts with SMART financial goal setting. So, what is a financial plan? It’s a guide to help you navigate and control your income, expenses, and savings. And determining financial goals helps you effectively move toward your ultimate endpoint by reducing doubt and uncertainties about your decisions.

For example, proper financial planning helps borrowers avoid headaches associated with loans. After all, loan providers may take borrowers to court if they default. As a result, borrowers may be obliged to sell their assets to settle the loan amount. Additionally, poor financial planning can make it more challenging for borrowers to take on new loans in the future.

Request a Loan Today*
By clicking “Get Started”, I consent and agree to the Privacy Policy and Terms of Site Use.
*By filling out the form above, you will be routed to OpenCashAdvance.com’s loan request form.

Specifically, financial planning helps you categorize and control your expenses and saving, thus enabling you to achieve financial freedom. And what does financial freedom mean? Being financially free means you no longer worry about money. 

Namely, it means you don’t worry about how much money you make. Instead, you worry about how much you can spend and save. As American businessman and author Robert Kiyosaki said, “Financial freedom is available to those who learn about it and work for it.” 

What’s the difference between financial freedom and financial independence? Financial independence refers to a threshold you reach when you start paying for your expenses and enjoying life more without relying on anyone else for assistance.


The golden rule of SMART goal setting often comes with two additional letters, E and R, which make it a SMARTER rule. Specifically, E stands for “Evaluated,” and R stands for “Revised” or “Rewarded.”

Evaluated Goals 

By evaluating or reviewing your goals weekly or monthly, you’ll achieve them more easily. Specifically, if you don’t assess them frequently, you can easily ignore them. Moreover, evaluation helps you measure your progress. So don’t forget to choose a point (daily, weekly, monthly) to evaluate your progress. 

Answer these questions:

  • What’s working? What’s not? 
  • What’s gone well? And what hasn’t? 
  • What’s been helpful down the road? 
  • Do I need to take any countermeasures to achieve success?

Revised or Rewarded Goals

By constantly evaluating your progress, trying different approaches, and readjusting your strategy, you can come closer to your target. And the results of goal setting will grant you a positive reward and a feeling of accomplishment. 

Why? It’s important to celebrate success.  No matter if it’s a raise at work or you’ve hit a savings milestone, take the time to celebrate your small win. After all, it indicates that you’ve adopted a successful SMART strategy and maintained discipline. As a result, you’ll be re-energized and focused.

Answer these questions:

  • How should I recognize achievements throughout the process?
  • How should I celebrate the goal achieved?

Psychology of Goal Setting

As a psychological tool, goal setting is a successful action plan you set for yourself. It drives self-motivation and gives meaning to your actions by creating a purpose for achieving something higher. That’s why goal setting is associated with improved motivation, self-esteem, self-confidence, and autonomy.

According to Frank L. Smoll, a psychologist at the University of Washington, goal setting has three essential features. Smoll calls them the A-B-C of goals:

  • A: Achievable: goals that are achievable or attainable
  • B: Believable: goals that you believe in and can realistically achieve
  • C: Committed: goals that you’re willing to commit to

What Are the Advantages and Disadvantages of SMART Goals?

SMART goals come with more than one advantage; some benefits include the following:

  • Providing a compass for you to navigate financial issues and help create objectives
  • Helping you better evaluate your strengths and weaknesses
  • Motivating and encouraging you to reach your endpoint
  • Helping you stay focused on the desired result
  • Enhancing performance
  • Revealing what you need to improve or adjust
  • Helping you monitor your progress and be satisfied with the results
  • Saving time and energy that can be redirected toward your goals

What about the disadvantages?

  • It may add unnecessary pressure
  • It may make you addicted to target achievement, thus overshadowing other essential tasks or areas, such as your health and personal or social life
  • Failing to meet your SMART goal may create a sense of disappointment and desperation 

Sum Up

A SMART financial goal stands for Specific, Measurable, Achievable, Realistic, and Time-Based. Goal setting helps you craft personal finance roadmaps, realize your vision for your future financial health, and be more in control of outcomes and the path toward those outcomes. And by following these roadmaps, you can raise your chances of reaching your target successfully and more efficiently. 

Ana-Maria Sanders, author at OpenLoans
Lead Writer
Ana-Maria Sanders is a highly-regarded writer with over a decade of expertise in the personal finance sphere, specializing in loans and credit cards.
Follow me: