A good financial goal should be SMART i.e. Specific, Measurable, Achievable, Realistic and Time bound.
| Description | Incorrect Approach | Right Approach | |
|---|---|---|---|
| Specific | You need to know exactly what you want to achieve and when you want it. | I need to set aside money for my granddaughterâs birthday next year. | I need to set aside Rs. 1,000/- every month for my granddaughterâs birthday celebration next year. |
| Measurable | A goal should be measurable so that you know when you will achieve it. | I will pay off most of my credit card dues soon. | In the next six months, I will pay off all my credit card bills in a disciplined manner. |
| Achievable | Your goal should be within a reasonable reach. | I will save money. | I will save Rs. 48,000/- every year by saving Rs. 4,000/- every month. |
| Realistic | Your goals need to be based on available resources which you can achieve reasonably. | By saving regularly, I will become a millionaire. | By saving regularly, I will be debt free next year. If I continue saving regularly after clearing my debt, by next December I will have enough funds to cover six months of living expenses. |
| Time-Bound | Goals with timelines allow you to track your progress and encourage you to keep going until you reach your goal. | I will save money for my daughter's marriage. | I will save Rs. 50,000/- every year for my daughter's marriage. |