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How to set SMART financial goals

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The big financial achievements you strive to accomplish in your life are made of smaller parts: the decisions you make each day with your earnings, spending and savings that add up to financial success. Having a clear and detailed plan that identifies your goals can keep you organized and on target.

One way many people structure their goals is SMART, an acronym that encourages you to make your goal specific, measurable, achievable, relevant and time-bound. Using SMART financial goals can be a strategic way to pave a path of living your values, achieving financial security and leaving a legacy.

One common life goal is to have more flexibility and options in the future by saving and investing wisely. Let's look at how this generalized ambition might become easier with a SMART framework.

What is a SMART goal?

SMART goals start with broad ideas about what you want to achieve, then help you add clarity to the detailed approach you'll take, turning the goal into a plan with clear steps to success.

A general statement, such as "I want to buy a house," is a nice start. The SMART framework can form that into a goal that incorporates specificity, measurability, achievability, relevancy and a timeline, so that it becomes "I want to buy a house in my desired neighborhood in three years and will save the down payment by setting aside $200 per month from my budget into a high-yield savings account until then."

Let's look at how the SMART method can help you get from ideas to actionable goals.

How to turn your financial ambitions into SMART goals

Making SMART financial goals begins with digging in and answering key questions about what you want from your finances and what you're willing to do to get there. Financial goals usually require tradeoffs, so when you opt to allocate money in one place, you'll also be figuring out where you'll either increase income or decrease spending to get there.

It's OK to begin with a somewhat vague goal for your financial future. It's your first step to solid planning. For instance, let's imagine a couple, Jim and Elizabeth, who are turning their attention in earnest toward paying for their retirement. Their general hope may be to save for retirement, but the SMART framework will help them flesh out that goal into a clear plan.


When you first look at a goal to make it SMART, you can almost always find ways to be more specific. Ask about the who, what, where, when, why and how of the goal. For instance, Jim and Elizabeth might start plotting out very specific elements of what they'd like to do:

  • Jim would like to retire at 65 and Elizabeth at 67, 15 years from now.
  • They'd like to have an annual retirement income of $80,000 a year.
  • They'd therefore like to have at least $1.5 million saved for retirement.


A measurement plan allows you to witness your progress and course-correct at milestone moments if needed.

Jim and Elizabeth might use a retirement calculator and decide they each want to contribute $800 a month to their 401(k) accounts. They put check-ins on their calendar every 12 months to see if they've persisted with that plan, and if not, they can recalculate and perhaps save more in the future.

They also can work with their financial advisor to make the challenge of $1.5 million a little less daunting through tax-efficient strategies. A financial advisor can help them understand which accounts will require them to pay taxes now, which ones defer tax payments until retirement and which ones allow money to grow without ever paying taxes, a valuable additional wealth boost. Jim and Elizabeth can measure the impact of paying less taxes overall and adjust what they need to save and invest each month to achieve their overall goal.


As Jim and Elizabeth get into the nitty-gritty of their measurable goals, they may confront some issues with achievability, the next part of the SMART framework.

Perhaps they don't have $800 of wiggle room in the monthly budget for each of them to contribute to their retirement accounts. Instead of setting that goal and simply failing to achieve it, they can look at a variety of options for change. For example, they might reduce other monthly expenses or look at how they can invest in a more tax-efficient way to reduce how much they need to save overall. A more achievable goal is harder to abandon in a tough moment.

Making goals achievable also involves putting financial security guardrails in place. If Jim and Elizabeth didn't have an emergency fund, for instance, a big car repair might set them back multiple months of savings, making it difficult to save for retirement at that moment. Having the emergency fund allows them to make the car repair and start slowly refilling the fund over time, ideally without cutting their retirement contributions nearly as much.

Other financial security measures include purchasing disability insurance and life insurance, either through work or through a personal policy. These insurance options allow your financial life to be less harshly affected if illness or injury prevents work for a season, or if a death in the family creates both a time of grief and a loss of income.


Over the years, it can be hard to stay the course with an arbitrary goal. If the goal is simply "save this amount for retirement"—without a good reason—the draw of spending on something more immediately satisfying could easily prevail. Defining why a goal is relevant will help you stick to your plan.

Jim and Elizabeth may realize they want the freedom to retire young enough to spend time volunteering for their favorite causes and making memories with any grandchildren they might have. They want the financial security to know their medical and housing needs will be covered. They don't want to be burdened with large tax bills while they are trying to enjoy retirement.

Jim and Elizabeth would also love for their legacy to benefit certain charities while also being a source of generational wealth to their children and grandchildren. Remembering these big-picture factors can make the simple act of budgeting for retirement month after month more motivating.


The final part of a SMART goal is to make it time-bound. While many financial goals have a time horizon, such as the date you'd like to retire, there are wise ways to make a goal even more deadline-driven.

For instance, Jim and Elizabeth might decide that if something causes them to reduce their retirement contributions for a time, they need to plan how to get back on track within three to six months. Otherwise, it's easy to cancel systematic contribution, and before you know it, it's been two years since you contributed to your retirement account. These kinds of time-bound thoughts allow flexibility but also help with staying on track or getting back on track after a setback.

Involving time constraints also can mean recognizing the feasibility of a plan. Perhaps life circumstances come along, and Jim and Elizabeth realize that retiring at 68 and 70 (rather than 65 and 67) would be better for their lifestyle and expenses. It's still a time-bound goal, but now it's aligned with what is achievable for their situation.

Get help tailoring your SMART financial goals

Retirement planning isn't the only place SMART goals are useful. You can ask your Thrivent financial advisor a question like, "Can we save enough to pay for our child's college?" or "Can we purchase a house in three years?" In turn, they'll ask you questions that narrow down your big goal into the specific, measurable, achievable, relevant and time-bound components that will help you chart your path to financial clarity.

Hypothetical examples are for illustrative purposes. May not be representative of actual results.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.