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  • Goals.  Not just for soccer any more.

Let’s say that you want to save up for next Christmas.  Or vacation.  Or start, and maintain, an emergency savings account.  (Nudge, nudge, hint, hint…start with this last one!) 

Studies show that if you write your goals down you are more likely to accomplish them.  Check out this article from Psychology Today: http://www.psychologytoday.com/articles/200307/the-goals-guide-us and Forbes: http://www.forbes.com/sites/daviddisalvo/2013/09/29/10-things-you-should-know-about-goals/ about goals.  The Forbes article also includes a PDF link to an article published in the Journal of Consumer Research.

But I want you to go BEYOND writing them down…and write them down in SMART format.

Since this is a money blog, we’ll use a financial example…and watch how smoothly it comes together…this is an exercise I do with every budgeting class I teach, and it’s very well received!

S–Specific.  What specifically do you want to accomplish?  For example: “I want to save $1000 in one year.”

M–Measureable.  How can you measure your goal?  “I want to save $1000 in one year, completed no later than January 15, 2014.”

A–Action-Oriented.  What steps are you going to take to achieve your goal?  What ACTION will you take?  “I will deposit $83.33 in an interest bearing savings account every month.”  For this step, make sure you list your months/pay periods, so that you can cross it out each time you compete it.  You can do the deposit a little bit each pay period or all at one time per month.  Just make sure you have it written down on your monthly/bi-weekly/weekly to do list and cross it out when you’re done.

R–Realistic. Needs first.  Roof over your head, food on the table, utilities paid, clothes on your back.  Basic needs for survival come before ANYTHING.  If you can set up the $83.33 to come out of your paycheck before you even see it, it will make this savings habit even easier.  If you don’t have that option where you work or you are running really tight paying off debt at the same time (which many people are), this should be a line item that comes after your NEEDS but before your WANTS!  Needs are things we have to have to survive (no, unfortunately, the Oreos and ice cream don’t count) and include debt payments…you are legally obligated to make those payments.  Wants include dining out, beauty, lawn maintenance, pet grooming/toys, etc., etc.  So, before you go out on a date, make sure you’ve put the money in savings!! 

T–Timely.  Can you accomplish the goal in the timeframe you outlined above?  In this case, yes.  $83.33 x 12= $999.96…(remember how we said “interest-bearing savings account”?  That makes up the other four cents…and hopefully a few more.  And VOILA!  You have $1000 and the start to a great emergency fund or other savings account.

Savings begins one penny, one nickel, one dime, one quarter, one dollar at a time.  If $1000 is out of your reach, how about $500?  Please let me know how I can help!