You must have heard this famous quote “If you don’t know where you are going, any road will get you there” in context of planning of a number of things in life starting from Career to Life Goals. This quote which is paraphrased from an exchange between Alice and the Cheshire Cat in Lewis Carroll’s Alice in Wonderland is also applicable in the case of Financial Planning.
A lot of people that I talk to have no specific life goals but “dreams” like:
“I want to be Rich”
“I want my children get the best education”
“I want a big car”
“I want to pay off my home loan”
I recommend to these people to be more specific and create SMART Goals. For those of you who are not familiar with this methodology the full form of the SMART acronym (from Wikipedia) is :
S : Specific – target a specific area for improvement
M: Measurable – quantify or at least suggest an indicator of progress
A: Assignable – specify who will do it
R: Realistic – state what results can realistically be achieved, given available resources
T: Time-related – specify when the result(s) can be achieved
So your SMART Goal could be:
“I want to pay off my home loan in the next 5 years”
“I want to buy a SUV 500 without any loan by January 2018”
As you will understand that these are more action oriented and you can now works towards achieving these Goals.
So as you think about your dreams related to your Life Goals use the SMART criteria to define them.
