Powerful Framework for Smart Financial Goals you must know

What will happen if we start investing without any goal?

Let me tell you my story about initial days of investing. First mistake I did when I started earning was that I never thought about investing and growing money. I wanted to spend money on my beloved persons so without thinking I used to spend whatever I was earning. Even I was earning very little around 13k per month and still I was feeling that I can buy anything.

Once I got married, I started getting responsibilities and felt that my salary was not enough for anything, so I started saving a little and created recurring deposit. This was my second mistake as I did not have any goal just started investing without any research and target. Due to this mistake, I was losing money due to lesser interest rate of RD compared to inflation rate.

Then third mistake I did was that I wanted to have a car, so I thought of buying one. I could have bought very small and budget car which I can afford but instead I bought one which was out of my budget. Even further for down payment, I emptied my bank balance completely with no left money. Hence, I got stuck with large EMI and that was big dent in my salary income. Due to that, I was not able to invest anymore. To solve this problem, I could have created SMART goal and bought a car on correct time.

When you start investing, you may do some mistakes and lose money, so if you want to avoid common mistakes then look at this article – how to avoid common mistakes to grow your money

I learned a lot of things about starting investment with creating SMART Goals. By the way, everyone creates their own goals but without deep thinking and planning. Ultimately, due to some circumstances, people get distracted and go off the track.

So how can you create a goal for which there are maximum chances of getting completed. To do that, there is a widely accepted framework called SMART. Your goal should be SMART. SMART stands for specific, measurable, achievable, relatable, time bound.

Let’s understand each check of SMART framework.

Specific – Define your goal very clearly for what exactly you want to achieve.

Ex. Instead of saying “I want to save more money,” say “I want to save 10000 per month for my emergency fund.”

Here saying emergency fund, you are giving purpose to that investment. That way you will try to achieve that goal passionately.

Measurable – Whatever goal you create, you should be able to track your progress in terms of numbers like amounts, percentages, or deadlines to measure your progress.

Ex. I will track my progress by checking my bank account balance or investment portfolio every week and updating a spreadsheet. With this check, you will be motivated with time as you will see increased completed percentage or total amount.

Achievable – Always create a goal which should be in your reach. While creating goal, please consider your current financial situation and resources. Do not aim higher because that can be discouraging.

Ex. Buying an affordable car in 3 years with saving 10000 Rs every month.

This will not let you demotivate. If you unnecessarily keep big goals and after sometimes you will start getting feelings that this goal is not achievable and hence you will be distracted and you will go and do something else now which is wrong.

Relevant – Stay relevant in terms of expectation which is actually priority or valuable for you. Talk to yourself about the importance of the goal and how it fits into your overall financial situation.

Ex. Instead of buying a car, buying a Home is priority so let me create a priority goal about saving for down payment.

This will keep you in check that you do not get distracted by random things like costly smart phones, costly cars.

Time-bound – Always sets the target date which will keep some pressure on you and that will keep you on track. This is very similar to achievable; time period is always required.

Ex. I want to reach my goal by December 31, 2026.

When you determine time period with specific amount, you know what to do and there is no confusion in that period anymore. It’s like paying EMI to bank but here we are doing for wealth not debt.

Conclusion

Having a clear goal and a plan will help you stay focused, motivated, and disciplined. It will also help you track your progress and adjust your strategy if needed.