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There is only one thing worse than not setting financial goals–setting ineffective financial goals. A perfect example of a worthless goal is, “I want to achieve financial freedom.” While it may sound good, we don’t know what financial freedom is, so how will we know when we have arrived? A slightly better goal is, “I want to be debt free.” But this goal also has shortcomings. After all, we will all be debt free eventually (when we are pushing up daisies), but that’s probably not what we have in mind.

Setting workable, practical effective financial goals is really quite easy. They just need to be SMART. A financial goal, or any goal for that matter, should be Specific, Measurable, Attainable, Realistic, and Time bound.


Imagine if the goal of football was to get the pigskin down to the other end of the field. We’d be arguing over what the other end of the field means. Isn’t the 2 yard line the other end of the field? Of course, the goal in football is to get the ball into the end zone. The official language of a touchdown is even more specific: “When any part of the ball, legally in possession of a player inbounds, breaks the plane of the opponent’s goal line, provided it is not a touchback.”

We need the same specificity when we set financial goals. Here are some good examples of specific goals:

  • I want to be debt free.
  • I want to make $100,000 from my blog.
  • I want to save $2,500,000 for retirement.

There is more left to do with these goals, so keep reading.


For a goal to be effective, it must be measurable. A goal to “make a lot of money” is not helpful because you can’t measure “a lot.” One of my goals for this blog in 2008 was to make $20,000. I set that goal, in part, because my wife and I decided to give 50% to charity, and we were hoping to give $10,000. This goal was easily measurable, and I’m happy to report that this year we ended up giving about $15,000 to charity from this blog, so we exceeded our goal! More on that later this month.

One final note on measurable goals. There is a saying in the consulting business that not everything that can be measured is important, and not everything that is important can be measured. As true as this is, when it comes to goals, they are either measurable or they aren’t really goals at all.


Setting attainable goals can be tricky. You certainly want to push yourself and strive to achieve as much as you can. But setting goals that even under the best of circumstances are not attainable will just lead to discouragement. I set my 2008 goal of making $20,000 from this blog this past January. At the time, I knew that I had made just over $800 from the blog in January, so a goal of $20,000 for the year was a stretch, but not ridiculous. I pushed myself, but kept the goal attainable.

This aspect of goal setting reminds me of Casey Kasem, who always said at the end of his popular “America’s Top 40” show, “keep your feet on the ground, and keep reaching for the stars.”


Setting realistic goals involves the methods we intend to use to achieve our goals. For example, a goal of having $2,500,000 at retirement by saving $5 a month under my mattress is not a realistic goal. Making $20,000 in 2008 from this blog by spending 1 hour a month blogging is also not a realistic goal (trust me!). An example of a realistic goal might be to pay off all credit card debt in 2009 by paying an extra $500 per month.

Time bound

This last element of SMART financial goals is really important. Effective goals have time limits, like the shot clock in basketball. Of course, not all goals are short-term. I would define a short-term goal as less than one year, an intermediate-term goal as one to five years, and a long-term goal as greater than five years. We need all of them.

Long-term goals generally involve retirement, saving for a child’s education, paying off the mortgage, and so on. An example of an intermediate-term goal might be to save $15,000 in four years to buy a new car. And short-term goals are even smaller stepping stones to our long range goals.

The lack of a time element is a problem with the three example goals I mentioned above. Let’s rewrite these goals to add a shot clock to each of them:

  • I want to pay off all of my credit card debt by December 31, 2009
  • I want to make $100,000 from my blog in 2009
  • I want to save $2,500,000 for retirement by time I’m 65


Yes, I’m giving you homework. As we near the end of the year, it’s a great time to be thinking about financial goals. I started setting next year’s goals in October. I have goals for this blog and my personal finances, which are now intertwined. I’ll be writing more about financial goals at the end of the month, but now is the time to set your financial goals for 2009. Just make sure they are SMART.

Author Bio

Total Articles: 1080
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

Nicki says:

I like spelled out goals and intentions so this post appeals to me. I think you’re right on with your goal-setting parameters. The only thing I would add is that it’s nice to have short and long-term goals, creating benchmarks for yourself. Being able to attain short-term goals gets me pumped up to achieve the long-term ones. Thanks!

DR says:

Nicki, nice point. If all your goals are long term, it can be discouraging and it becomes easy to lose focus.

Arpi says:

I love that you applied the SMART system to setting financial goals. We use it at my workplace each year to set career development goals. Thanks for sharing your goals! I’m still looking to make my first $100 from my blog by next July (1 year mark)!

DR says:

Arpi, I learned the SMART goal criteria from my eighth grade daughter who learned it in a personal finance course she’s taking! Good luck with the blog.

TStrump says:

Another issue to consider is can you have TOO many goals?
I think it’s important to have goals, but prioritize and focus on the most important onces first.