A critical first step in managing your finances is to be able to setup SMART financial objectives.  Your goals have to be S (specific), M (measurable, motivated), R (realistic, resource-based), and T (time-bound, trackable). Many people make the mistake of stating general goals which, more often than not, will not materialize.

• Specific. You need to know exactly what you want to achieve and when you want it.

General Goal:   I need to set aside money for next year’s tuition fees

Specific Goal:   I need to set aside P60,000 for next year’s tuition fee

• Measurable.   A goal should be measurable so that you know when you have achieved it.

General Goal:   I will pay off most of my credit card debt soon.

Measurable Goal:   In the next six months, I will pay three of my five credit card bills in full.

• Attainable.  Your goal should be within reasonable reach.

General Goal:   I will save money.

Attainable Goal: I will save P24,000 each year by putting aside P1,000 a week (or P200 every week day).

• Realistic.  Your goals need to be based on resources and tasks that you can reasonably accomplish.

General Goal:   By saving regularly, I will become a millionaire.

Realistic Goal:   By saving regularly, I will be debt free by next year and will have an emergency fund equal to six months of living expenses the year after next.

• Time-bound. Goals with timelines allow you to track your progress and encourage you to keep going until you reach your goal.

General Goal:   I will save money for my retirement.

Time-bound Goal:   I will save P50,000 a year for the next 10 years so I can retire comfortably.