The Importance of SMART Goals (and What to Do BEFORE Setting Them)

Setting goals might sound like the most tedious thing on your to-do list. It might not seem very exciting or fun. (What’s much more fun is achieving the goal and getting to use your money for what you wanted!)

This can be especially true if you’re doing your goal planning the right way, and setting SMART goals.

Those are goals that are Specific, Measurable, Actionable, Realistic, and Timebound… and it’s a lot of work to develop a goal with that much detail!

Setting SMART goals means you can’t just say, “I want more money,” and call it a day. Proper goal setting takes a little more work than that.

What Counts as a SMART Goal?

A SMART version of the goal to “have more money” might look more like this:

“I want to create $1,000,000 in net worth (not including my primary residence) in 20 years by saving 30 percent of my income and following a strategic investment plan.”

See the difference? This meets the requirements because it’s:

• Specific: It names a precise target (a net worth of $1,000,000, not including the value of a home you live in)
• Measurable: It uses a metric you can actually track (net worth = your assets minus your liabilities)
• Actionable: When you start with a specific and measurable goal, you can work backward from the end point and reverse engineer the individual steps, to-dos, and actions you need to take to move from where you are today to where you want to be in the future.
• Realistsic: Even though this is a big goal, it’s realistic (mainly because we’ve accounted for the “big” part of it by setting a very long timeframe in which to achieve it).
• Timebound: It states when the goal should be accomplished (within 20 years)

It takes a lot more thought and effort to set a goal that comes with all these specifics — but don’t let that scare you away from the process or discourage you.

This is where you get to create what you want to have in your life, so it’s not something to shy away from or think is too much work. This is where things get exciting, because you’re putting dreams down on paper and making plans to make them real!

Don’t Think In Terms of Goals — Think About Values and Priorities

If you feel uncertain about this entire process because you’re not sure what your “goals” are, you may just need to change up the language a little bit.

We talk a lot about SMART goals, but not everyone identifies with that phrase. You might not have anything in particular you want to spend money on, for example, or you might not be entirely sure what exactly you’ll want in your life in 30 years.

But that doesn’t mean you don’t have things you want, things you value, and things that are important to you. Focus on those instead if “goals” isn’t something that resonates with you.

And even if you think you have a laundry list of SMART goals to achieve, it’s still important to step back and ask these kinds of questions — questions like, what do you want more of in your life? What is your priority? What do your core values look like?

Your SMART goals should reflect your answers here. If they don’t, it’s a good idea to examine them further and ask yourself why you’re trying to accomplish a goal that doesn’t quite align with your values or priorities.

Once you get clear on what matters, then you can dig into the specifics of your goal-setting and decide:

• When you want to achieve your goal by
• How much money it will take
• The strategies or systems you can use to get the required amount of money to make your goal a reality
• Which goals are the biggest priorities, and which ones may need to wait

The Secret to Success with Planning Out (and Achieving) Your Goals

Goal-planning is at the heart of what makes up a financial plan. But there’s a dangerous trap that many people fall into here:

Failing to account for the stuff they’ve already done. Acknowledging all the progress they’ve already made.

How often do you look back at, reflect on, or write down your accomplishments? I’m guessing not often. Most people don’t.

It’s easy to end up aways focused on what’s ahead — and I’m saying this knowing I’m 100% guilty of it, too.

Most people tend to get so caught up in where they’re going that they never take the time to stop and consider all the boxes they’ve already checked off from their to-do lists.

And if you’re like most of my clients and me — high-achieving, goal-oriented, driven to reach greater and greater success and constantly setting bigger and bigger goals — considering your progress on a periodic basis is really hard.

You might not want to take your eyes off the ultimate end goal, even for a second.

Or you may be a perfectionist, and giving yourself a pat on the back for the progress you’ve made feels weird and makes you want to squirm because all you can see is all the work still to be done (or all the mistakes you made along the way).

But one of the driving forces behind motivation is progress.

Even more than motivation, progress seems to be the root cause of much of our happiness. Consider what Tony Robbins says about what it takes to be truly fulfilled:

“When you achieve a goal, it feels good for — how long? You know, a week? A month? Six months? A year? And then it doesn’t feel so good. I don’t care what it is you’ve achieved, and the reason is because life is not about achieving the goals, life is about who you become in pursuit of those goals.”

The Problem That Comes from Ignoring Progress

If this feels too warm-and-fuzzy or fluffy for you, let’s take a step back and consider what happens when you don’t make space to think about and acknowledge the progress you make along the way.

The biggest consequence? There’s never “enough.” It’s the moving goalpost effect: you set a goal, you get there, and if you don’t take time to reflect or consider how much you just accomplished, you don’t appreciate it.

And then you don’t feel satisfied, fulfilled, or successful. It can also make it hard to set new goals when the time comes, because you wonder — what’s the point? Why bother?

The achievement becomes your new normal and you quickly adjust the goal to be “more,” “better,” or “bigger.”

This cycle repeats endlessly because when it comes to concepts like success or wealth, there’s no real definition of “enough.”

It’s up to you to define what that looks like.

Before You Set New Goals, Look Back at All You’ve Already Accomplished

The only way to measure your progress is to identify the steps you took over a given period of time.

Remember, happiness doesn’t come from achieving goals, but from making progress toward them.

Here’s what I suggest doing: reflect on and write down the events, highlights, milestones, and accomplishments you enjoyed over the past weeks, months, or even full year.

I sit down at the end of every year, pull up my calendar, and work through every month, writing down the big wins, accomplishments, and good times I enjoyed each and every month.

If you follow a similar process, then you will be:

• More aware of just how far you’ve come; you know how much work you actually did, and how many of your goals (big and small) you accomplished.
• Reminded of where you started — and when you can compare that to where you are today, you can get more clarity on how much success you’ve already enjoyed.
• Able to feel more grateful, successful, and satisfied with these reminders that you are making progress toward what you identified as most important to you.

This process also puts you in a better position to set new, SMART goals. You get to make more informed decisions about what you want because you’re more mindful of what you’ve already worked to achieve and have.

It can also help you avoid falling into that “moving goalpost” trap, or feeling like there’s never enough. Seeing where you started versus where you stand today can be eyeopening, and help illuminate what is now most important to you since you’ve made all that progress from start to present.

Then, use your progress as motivation to keep reaching for what you want to achieve next — knowing that what you want is possible, and you’ve already proven that via all the hard work you did to get to where you are today.

Want more financial advice you can actually use? Check out Beyond Your Hammock, a fee-only financial planning firm that specializes in helping 30- and 40-somethings get clarity and start building wealth.