The importance of goal setting

Written by PayPlan on 27 February 2018

Hi, I’m Nicola and I blog over at about budgeting, money saving and early retirement. I set myself goals every month so that I have something specific to aim for.

It can be so easy to drift along in life, without really achieving your potential, especially when everyday life can be so hectic. Time seems to pass by in a blink of an eye and before you know it, another week is over.

But, setting yourself smart, measurable, achievable goals is so important. It can make the difference between achieving what you want to or falling short of the mark.

Why is it important to set goals?

Imagine that you have no goals that you wanted to achieve, ever. How would you know what you wanted? This goes for every part of your life, including your finances. It is important to have some kind of aims in place, to set the bar for what you want to achieve.

What is a smart goal?

When talking about making goals, to be most effective these need to be SMART goals. This stands for specific, measurable, attainable, relevant and timely. Making a goal using these attributes means that you are more likely to achieve it, as you are setting yourself up to achieve, plus giving yourself a time frame to do it in. A time frame is important!

Breaking that down into smaller steps

A specific goal means something concise. The more specific you are about your goal, the more likely you are to be successful. So, instead of saying ‘I want to pay off my debts’, switch it to ‘I want to pay off £300 by the end of the month’. That’s much more specific and tangible.

A measurable goal is something that requires evidence to be achieved. So, again, using the example above, if you are aiming to pay off £300 by the end of the month, then by the end of the month you can see whether or not you have managed that number. A measurable goal can clearly be seen at the end.

An attainable goal is something that is actually achievable, not a pie-in-the-sky goal. Something that you could complete successfully if you put your mind to it. There’s no point in making goals if they are not attainable; this will only dampen your spirits and make you more likely to give up.

A goal that is relevant to you is also important. Are the goals you are setting yourself helpful to your own situation? Paying off debt will only improve your overall circumstance, so this would be a relevant goal.

Finally, a goal with a time frame tends to be achieved far more often. Having a deadline can really help focus the mind! Most smart goals will be shorter term, though there’s no harm in you creating some more long term goals. Especially with finances, a long term goal would be thinking about retirement funding. Something that seems like a long way away, but if you starter earlier, the better you’ll be in the long run.

What happens if you don’t meet your goal?

Remember, just because you don’t hit every goal, it doesn’t mean that it isn’t worth making it in the first place. It absolutely is! Even if you fall short, it doesn’t mean you shouldn’t try. Goal setting isn’t an all-or-nothing situation; you don’t have to hand it back if you don’t get 100%.

Setting goals is also trying to focus on the positive – look at what you can achieve – rather than what you might not. It is so important to set yourself regular goals, even if some of them seem trivial to begin with. A to do list is a daily goal list, at the end of the day. Start off small and go from there; your days will become more focused as you begin to feel the momentum of meeting your own goals.

Don’t forget, that goals might change along the way. Life can take us on unexpected journeys; so don’t be afraid to tweak your goals to suit your change in circumstances. We can all do that! A goal might suddenly not be attainable any longer, so change the goal.

In conclusion, I think that goal setting is important and sticking to them can really help have a positive impact on all areas of life, including finances. You can check out my website for more tips on budgeting and goal setting, to live the life you want on a budget!

Filed under Money Management

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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