Paying off any level of debt can be an incredibly hard task, especially when you don’t have any real direction or focus. When you are trying to save or pay off an amount of debt there always seems to be something that comes up that halts your progress at the last minute, just as you think you’re nearly across the line. I’ve found that the best way to monitor how well you are doing financially, while at the same time aiming to improve your situation, is by setting yourself some financial objectives.
In my opinion setting something to aim for is incredibly important, whether financial or otherwise. When I set myself some financial objectives I try and set myself a set of small aims that then lead to an overall goal. I find that using this sort of structure helps to keep me motivated in what can be a long drawn out process. But setting financial objectives isn’t the easiest thing in the world to do, and I think that your objectives should always follow a simple yet effective structure.
Having SMART objectives
When I set myself financial objectives I always follow a certain structure, that objectives should be SMART. SMART is an acronym for what you objectives should be, Specific, Measurable, Achievable, Realistic, Timed. I have seen other variations of what SMART stands for but this is what I like to stick to. So here’s how you use SMART when you are setting yourself objectives:
- Specific – An objective should always specify exactly what it wants to achieve, having something to specifically aim for helps to keep you motivated
- Measurable – A measurable objective is basically an aim that you measure your progress against
- Achievable – An achievable objective should always be attainable, there’s no point setting yourself an objective that you’re not going to be able to achieve
- Realistic – You should always be able to realistically achieve the objectives you set, can you meet your objectives with the resources you have available to you?
- Timed – You should always set yourself a time limit when looking at your objectives, setting minor aims that you can achieve in quick time and lead to an overall objective that may be 6 months or a year in the future.
Examples of SMART financial objectives
- I want to increase my bank account balance by 5% in the next 6 months
- I want to reduce my debt by 10% over the next year
- I want to pay off the remaining balance on my credit card within 3 months
Set yourself some SMART financial objectives for 2011 and see how you get on.
Article written by Money Supermarket