Creating a savings goal is commonly confused with creating a dream. For example, when people are asked to create a savings goal for a vacation trip or a car, their response is “I want to go to [location]” and “I want to have a [car model]”. This only represents what the individuals want (a dream) without creating a reasonable process (savings goal) to achieve this end product.
That being said, we peer educators at the Financial Wellness for College Students program advocate S.M.A.R.T. Goals. When creating a savings goal, it is important that you incorporate all five of these components: Specific, Measurable, Agreed Upon, Realistic, and Timely.
Specific: Make your goal well defined so that it can be clear to anyone who has a basic knowledge of your project.
Measurable: Create an easy way to keep track of your goals that allow it to be motivational to achieve.
Agreed Upon: In cases when your goal involves others, collaborate and make sure that everyone acknowledges the goal.
Realistic: This allows your goal to be results-oriented and a reasonable-seeming accomplishment.
Timely: Create a timeline when this goal will be achieved. Being able to track your progress encourages you to continue and see that the effort is effective.
Download a handy form to write your own S.M.A.R.T. goals.
Written by: Rex Wang, Financial Wellness Peer Educator, University of Illinois Extension, 2017.
Reviewed by: Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension, 2017.