You might already have a general financial goal in mind like “pay off my debt” or “buy a home” in mind when considering a debt consolidation service. However, there's more to financial goal-setting than that.
When you create a goal for yourself, following a specific goal-setting framework, like the SMART framework, improves your chances of achieving your goal. SMART is an acronym for:
- Specific. Goals should be as specific as possible so you know what you want to achieve.
- Measurable. Goals should have some kind of clear, objective measurement so they're easy to track.
- Achievable/Attainable. Goals should be realistic so you know you can meet them. Otherwise, it could become demoralizing if they go unmet by too wide a margin.
- Relevant. Is the goal meaningful to you? While financial goals are almost always “relevant” to your situation, it helps to pick a goal that will keep you motivated.
- Timely/Time-Based. Is there a set time for accomplishing your goal? Keeping a due date in mind can help keep you motivated so you can give yourself an extra push if needed.
For example, a SMART goal for debt management might look something like: I want to pay down my $30,000 debt by 33%, by the end of next year. Depending on your budget, this goal should be achievable; it's specific and measurable; it's relevant to the person, and there's a due date to help keep things on track.
Setting some short-term goals can help to keep you motivated by breaking things up into more manageable tasks that contribute towards your long-term goals. For example, taking that goal of paying off 33% of your $30,000 debt by the end of next year, you can turn that into paying $833 towards your debt each month for 12 months.