How to set a financial goal

We typically all have financial goals.  The problem is, for most of us, they are to vague: "I want to be rich", "I want to retire early", "I want to be debt free".  They are all goals, and they are better than no goals.  But goals setting and goal attainment have been studied, and there is a clear path to setting goals and achieving them.

I've had a goal of getting out of debt for a long time.  And I've made progress on it for a long time. But until I broke it down into specific steps, and put some clearly stated objectives and timelines with them, I didn't make a lot of progress. Once I started making clearly definable goals, noticeable progress started.

There are multiple methods of setting goals.  I will review one strategy, and that is setting SMART goals

Specific-- that is your goals should be specific.  While my over all greater goal is to be debt free, right now I am focusing on paying off my car early. I have broken this down into even further steps to make this achievable, and you are on my blog about cutting my grocery expenses to $25 a week in order to make this happen. I am also cutting spending in many other areas of my life as well, which you don't see here.
Measurable--my current goal is easy to measure. At any time, I can check my car payoff amount, and compare that to how much shorter it is making the length of my loan. So far, it is about 4 months shorter.
Attainable--this means, the goal actually has to be something you can accomplish.  If my goal were to be to pay off my car AND save $25,000 in one year, on my income, it would simply be IMPOSSIBLE.
Relevant--this means it is important to me and brings me some worth. Because it is relevant and worthy to me, I will be willing to put the time and effort into achieving it.
Time bound-- goals without an end date are likely to never be reached. In this case, I want to do it in 1.25 years.  I may be able to hit it in 1 year, but 1.25 years is more realistic.

Studies have shown if you write down your goals, you are more likely to achieve them. I often have a goal list taped up right next to my computer.  Every year, I set goals for leisure/fun, personal growth, financial, professional growth, and health.

I have found if I focus intently on one area, another slips. Right now, I have two goals... spend $25 a week AND lose weight. Right now, I have been struggling on getting the two to balance.  I know it is possible, but I haven't taken the time to figure it out (a bagel with peanut butter is cheaper than yogurt for breakfast, but it has a LOT more calories).  This is going to be something I focus on in the next couple of weeks.

I don't recommend having more than ONE goal that takes a lot of focus and energy, unless you are one of those rare people with lots of extra time on your hands.