How to Set Financial Goals Using the SMART Goals Framework

Financial goals are the cornerstone of financial confidence and control. They provide a roadmap for where you want to go and how you plan to get there. Setting these goals helps you manage your money more effectively, ensuring that you are saving, investing, and spending in a way that aligns with your long-term aspirations.

But having a goal is more than simply saying, “I want to save more” or “I want to pay off debt.” A strong goal acts as a clear guide, helping you define exactly what you want to accomplish and how you’ll get there.

As Sirena Thompson, a Centralized Underwriter at First Alliance Credit Union, on a recent Good Money Moves podcast episode shared, "I think S.M.A.R.T. goals are a really great way to start looking at what you're reaching towards."

What Are SMART Goals?

The S.M.A.R.T. goals framework is a practical, step-by-step tool for turning your financial intentions into clear, achievable plans.

S.M.A.R.T. stands for:

• Specific
• Measurable
• Achievable
• Relevant
• Time-bound

This method provides a clear and structured approach to goal-setting, making it easier to track your progress and stay motivated. SMART goals are particularly effective because they break down your larger financial aspirations into manageable steps.

As Sirena also, points out on the podcast, "Having those kind of little wins along the way can be so motivating, especially if you're working towards a really big goal."

Watch & Learn: How to Achieve Your Financial Goals

Breaking Down the SMART Goals Framework

Let’s delve deeper into what each component of S.M.A.R.T. stands for and how it helps you turn a vague intention into a clear, doable financial plan:

• Specific: Clearly define what you want to achieve. Instead of saying, "I want to save money," specify the amount you aim to save and what your saving for, like "$2,000 for a car down payment."

• Measurable: Ensure your goal is quantifiable. This allows you to track your progress. For example, "I will save $150 every month."

• Achievable: Set a realistic goal that you can accomplish given your current resources and constraints. Avoid overly ambitious targets that may discourage you.

• Relevant: Your goal should align with your broader financial objectives. Ask yourself why this goal matters and how it fits into your overall financial plan.

• Time-bound: Set a deadline to create a sense of urgency. For instance, "I will save $2,000 within one year."

Follow along with each step in this guide by downloading your free S.M.A.R.T. Goal Setting Packet now!

How to Set a SMART Financial Goal Step-by-Step:

Now that you understand what SMART goals are and why they matter, let’s walk through how to build one from start to finish. This process will help you move from a general idea, like wanting to "save more" or "pay down debt", to a clear, structured plan you can follow and measure over time. Make sure to download our free SMART goals setting packet so you can follow along with each step in the guide.

Identify Your Goal: 

Start by determining what financial goal you want to achieve and why it matters to you. Are you trying to reduce stress around unexpected expenses, improve your daily commute, or gain more independence? Clearly naming your "what and your “why” will help you stay focused when it’s tempting to give up.

For example, let’s say you want to save money for a down payment on a car (your what), so you can rely less on rideshares and have more control over your schedule (your why).

Make It Specific:

Define the exact amount you need to save and reinforce what it’s for. For example, “I want to save $2,000 for a down payment on a car so I can stop relying on rideshares and have a more reliable way to get to work.”

This turns your idea into a clear, concrete target you can visualize and plan around, instead of a vague goal like “save more money.” When you know the dollar amount and the purpose behind it, it becomes much easier to map out how you’ll get there and to stay motivated along the way.

Ensure It's Measurable:

Break down the total amount into smaller, measurable targets. For example, "I will save $500 every three months." This makes it easier to see your progress and stay motivated because you’ll know exactly how much you need to set aside and how often.

You can even align these smaller milestones with your paychecks, such as saving a set amount from each paycheck, so the goal feels more manageable in your monthly budget and less overwhelming overall.

Check Its Achievability:

Assess your current financial situation to ensure this financial goal is realistic. Consider your income, expenses, and any other financial commitments. Look closely at how much money is coming in each month, what your non-negotiable bills are, like rent, utilities, loan payments, and groceries, and how much is currently going toward discretionary spending.

From there, determine what you can reasonably set aside for this goal without putting yourself in a financial bind or relying on credit cards to fill the gaps. 

For example, if you’re currently managing a high amount of credit card debt, saving $500 over three months might not be realistic right away. In that case, it may be better to focus first on bringing your debt under control and then slowly increasing how much you save. On the other hand, after comparing your goal to your budget, you might discover you can comfortably save more than $500 in three months by trimming small expenses in other areas of your spending.

The achievability check is an extremely important step in the process of setting money goals; Sirena said it best on the podcast,

"You have to know where your money is going first. I think that can be the biggest challenge for a lot of people is knowing where your money is going, so you can start to determine where you can comfortably pull back and start maybe putting some of that money into savings." ~ Sirena Thompson on the Good Money Moves podcast

If needed, adjust either the amount you plan to save or the timeline so that your goal feels comfortably within reach based on your real-life numbers.

Relevance Is Key:

Make sure this goal aligns with your long-term financial plans. For example, ask yourself how buying a car will benefit you and fit into your lifestyle both now and in the future. Will it help you get to work more reliably, make it easier to manage family responsibilities, or reduce what you’re currently spending on rideshares, maintenance, or an older vehicle?

Consider how this purchase might affect your other priorities too, like saving for a home, building an emergency fund, or paying down debt. When your car goal clearly supports your bigger financial picture, you’re far more likely to stay committed and feel confident about the choices you’re making with your money.

Set a Deadline:

Establish a timeline to keep you on track. For example, "I will save $2,000 within one year," from there, break that year-long deadline into smaller checkpoints, such as saving about $170 each month or $85 from each paycheck if you’re paid twice a month.

Putting specific dates on your milestones not only gives you something concrete to aim for, it also makes it easier to see when you’re ahead or need to make adjustments, like cutting a small expense or adding a little extra to your savings in a particular month.

Achieve Your Financial Goals with First Alliance Credit Union

Setting and achieving financial goals can be challenging, but you don't have to do it alone. First Alliance Credit Union offers a variety of tools and resources to help you on your financial journey. From budgeting worksheets to financial advisors, we are here to support you every step of the way.

"Come into a branch and talk to a member advisor," Sirena suggests. "Setting those goals and having somebody who's celebrating with you and seeing your achievements can make all the difference."

For more information on how to set effective financial goals and achieve financial confidence and control, visit First Alliance Credit Union. Let's work together to make your financial dreams a reality.

Want help achieving your S.M.A.R.T. financial goal? Reach out to our team for free financial support today.