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Personal Goal Setting: Definition & Ideas

Instructor: Ashley Johns

Ashley has taught college business courses and has a master's degree in management.

Everyone sits around daydreaming about what they want to have and do in life. The question is, 'how are we going to do it?' It is important to establish personal goals and then a plan on how to reach them. This lesson shows you how to do that.

Why Set Goals?

Are you going through life aiming at nothing? What are you getting? If you haven't set goals, you are most likely not where you would like to be. Perhaps you should take a different approach. Most of us have dreams. Why not achieve them? Having dreams without goals is like shooting at a target without aiming. If you want to hit your intended target, then set goals.

Short-Term vs. Long-Term

It is important to understand the difference between short-term and long-term goals. This is the first step to setting successful goals that you can achieve. A short-term goal is something you want to achieve in the near future. These are typically meet within a year. A long-term goal is something you want to reach further in the future. These goals take longer than a year to achieve.

Most of us go through life thinking about our long-term goals, but have no idea how to actually get there. Long-Term goals are things like owning a home and paying off the mortgage. It could take you five years to get to the point that you can buy a home, depending on your financial situation, and most mortgages are setup for 15-20 years. Since both the purchase and payoff of a home take longer than a year, they are both considered long-term goals.

SMART Goal Theory

Now that you understand what a long-term goal is, it is time to figure out how to achieve it. A popular way to set goals is by using the SMART Goal Theory. The SMART Goal Theory stands for Specific, Measurable, Achievable, Realistic and Timely. This theory helps you set short-term goals that lead you to achieve your long-term goals. For example, let's go back to the long-term goal of owning a home. For the purpose of this example, your research tells you that you need a certain credit score and down payment. This leads you to write the following SMART goals:

  • Put $150 of every paycheck towards credit card debt to increase credit score. I will do this for two years, while getting paid every two weeks, and I will payoff my credit card debt of $7,800. I will not charge additional debt to any credit cards.
  • Put $200 of every paycheck into a savings account for a down payment on a home. I'm paid every two weeks, giving me $10,400 in two years.

These goals meet the SMART Goal Theory. They set specific amounts of money and time periods. You can measure each and how it will reach your long-term goal. They are achievable and realistic because you know you have that extra money, even if there are small things you must give up (ex. drinking pop, eating out, cable). They are timely because you set a specific amount of time that is not too distant.

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