Making your goals as concrete as possible will help you focus on what’s really important. A goal that’s well defined will be easier to visualize, and easier to stick with.

To set clear-cut goals, you can use the SMART technique. SMART is an acronym that stands for specific, measurable, attainable, relevant, and timely.

A goal that’s specific is one that’s clearly defined and described in detail. Precisely, what do you want to accomplish? “I want to save for my child’s college education” is not a specific goal, but “I want to save the cost of 4 years at Homegrown U. by the time my daughter turns 17” is clearly defined.

With a goal that’s measurable, you should be able to track your progress and clearly know when you’ve reached it. For example, “I want to retire early” is not a measurable goal. But “I want to retire by my 55th birthday” is a goal that has a definite endpoint.

An attainable goal is realistic and reachable. Goals can be challenging, but you should have a fair chance of achieving them. “I want to save $1 million in 5 years” is not an attainable goal for many people, but “I want to save $1 million in 30 years” may well be an attainable goal.

A relevant goal is one that makes sense to you, and that reflects your specific needs and your values. Goals that are relevant are goals you will be excited about because they will be important to you. For example, “I want to save $25,000 for a down payment so I can own my own home” is an example of a goal that might be relevant.

You must be able to set a time frame or deadline for reaching your goal. “I want to pay off my credit card debt by the end of next year” is a goal that has a clear deadline.

Writing down and prioritizing your goals is an essential first step towards putting a financial plan into action.

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The old wisdom said that if you saved 10% of your income throughout your working years, you would have adequate assets to retire. Sadly, with medical costs and other expenses in retirement, a steady 10% savings plan is not likely to get you to a fully funded retirement.
A better model is to aim to achieve a 10% savings rate before the end of your 20’s, a 12% savings rate during your 30’s, and 15% from 40 to retirement. You can count any contributions your employer makes on your behalf toward this goal.