The Art of setting S.M.A.R.T Financial Goals



In life, we all have financial aspirations, whether we realize it or not. It could be that new cell phone you’ve been eyeing, the family vacation you dream of, or even that home renovation project. Some might simplify their financial goals into one ambitious yet vague desire: to become rich.


But here’s the catch – aspiring to be wealthy isn’t a S.M.A.R.T. financial goal, and here’s why:


A specific goal is essential; “Becoming wealthy” is a desire, not a goal. To create a potent and achievable goal, it must specify a number.


Achieving specificity involves asking essential questions:


  1. Who benefits from this goal?
  2. Why do you want it? What are the benefits and reasons?
  3. What’s the exact target?
  4. When’s the deadline?
  5. What do you need and what limits do you face?


For example, while “Become rich” is vague, a specific goal like “Increase monthly investments by Rs. 50,000 to reach a Rs. 2 crore portfolio in 15 years” brings clarity and actionability to your aspirations.


  • Measurable Goals: When you set a goal, it’s rewarding to track your progress. Having a target and a timeline enables you to monitor your achievements, motivating you with each milestone reached.


Consider it like planning a vacation; you make a to-do list and check off items one by one. Likewise, with financial goals, having a measurable plan is crucial.


Suppose you’re saving for a family vacation, and you need to save Rs. 10,000 every month for 12 months to go on the trip next September. This way, your goal becomes easy to measure and track. Monthly, you can gauge your savings, adjust if needed, or even reward yourself for surpassing your target.


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Remember, the clearer your goal, the easier it is to track and achieve.


You can do this easily on Kuvera app through the Goal based planning feature. 


  • Adjustable Goals: Goals aren’t all-or-nothing; they can be adjusted as life unfolds. You needn’t stress about unforeseen events.


Goals aren’t win-or-lose. You can achieve 100%, 85%, or 50%. The key is to keep working toward them, adapting as needed.


Imagine you’re saving for retirement, but then you lose your job during a tough economic time. You dip into retirement funds to cover expenses until you find a new job. It’s not ideal, but fretting over timeline adjustments won’t help. When employed again, rebuild your savings, and tweak your retirement plan as necessary.


  • Realistic Goals: Our generation is driven—we aim to provide for our families, excel in our careers, and enjoy life’s pleasures. But is it realistic to pursue all these aspirations and more?


When setting financial goals, embrace realism. Prioritize your goals, understand your capabilities, and stretch just enough to achieve that extra edge. Remember, avoid unnecessary risks, and don’t set yourself up for disappointment. Money is a tool to reach your dreams, not the end goal itself.


  • Time-based Goals: Without a timeframe, a goal lacks urgency and progress measurement. A specific timeframe, like aiming to buy a Rs. 6 lakh car in 18 months, gives your goal structure and a sense of achievement.


Setting S.M.A.R.T. financial goals aren’t just about managing your finances; it’s about translating your dreams into actionable steps. These goals act as a compass and conscience, helping you make financial decisions that align with your objectives. So, next time you consider a purchase, your financial awareness will guide you toward your goals, making every rupee count.


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