U.S. Markets open in 29 mins.

Are Your Money Resolutions SMART?

Abby Hayes

If you're like many people, at least some of your New Year's resolutions are related to your money. Maybe you want to save more for retirement or pay off debt. Maybe your goal is to buy a home in 2014 or to open a college savings account for your child.

These are all great financial goals, but you're not likely to achieve vague goals like these. To really reach your financial goals in 2014, you need to make sure those resolutions you're setting are SMART.

SMART is a mnemonic that has been used to help individuals and businesses set and reach goals since the 1980s. If you learn to set SMART - Specific, Measurable, Attainable, Relevant, Time-Bound - resolutions, you'll be more likely to actually achieve your goals and make financial progress in this new year. Here's how:


The first step to reaching your money goals this year is to make your goals specific. If a goal isn't specific, after all, how will you know exactly what you need to do to reach it? And how will you know when you've completed your goal?

So instead of just resolving to pay off debt, resolve to pay off your $3,500 in credit card debt. Rather than resolving to increase your retirement savings, resolve to max out your contributions to your individual retirement account.


When you make your financial goals specific, you're well on your way to ensuring they're measurable. But larger financial goals may need to be broken down into smaller measurable increments.

For instance, you're not likely to dump $5,500 (the maximum contribution for those under age 50) into your IRA all at once. So break this goal down into more manageable pieces. Put $458 per month into your account, or add $1,375 per quarter. If you're aiming to pay down that $3,500 in credit card debt, check your statements each month to track how close you are to paying it off.


Here's where many of us struggle when making goals: We think too big. If you're sitting on $40,000 in debt and make $50,000 a year, you probably shouldn't aim to be debt-free by the end of 2014.

You want to ensure you have some measure of control over your financial goals. Aiming to make more money in 2014 is great, but that goal may hinge on things over which you have no control - like your boss's willingness to give you a raise.

Attainable goals can require you to stretch and sacrifice, but extreme, out-of-reach goals will just leave you feeling defeated before you even get started. In fact, if you set the bar too high, you're more likely to give up quickly.


Relevant financial resolutions are ones that fit into your overarching, long-term life goals. When it comes to personal finance goals, relevancy is important.

For instance, maxing out your IRA is great. But this goal should be lower priority if you're dealing with $10,000 of high-interest credit card debt. Focus on paying off the debt first, and then worry about saving for retirement.


New Year's resolutions usually meet this requirement just by their nature. When you make a New Year's resolution, you're usually vowing to reach some goal within the next year. Still, tying your goals to a target date is a good way to track your progress and keep your commitment high.

For some of your goals, you may want to set several deadlines. For example, if you want to pay off three credit card balances, planning separate deadlines for paying off each balance can make it easier to stay on track throughout the year.

Setting SMART goals isn't rocket science. But if your money resolutions for 2014 meet these requirements, you'll be well on your way to a more prosperous year.

Abby Hayes is a freelance blogger and journalist who writes for personal finance blog The Dough Roller and contributes to Dough Roller's weekly newsletter.

More From US News & World Report