Which of the following is a recommended practice for setting financial goals?

Making goals specific, measurable, attainable, relevant, and time-bound (SMART) is a widely endorsed framework for setting effective financial goals. This approach allows individuals to define their objectives clearly, ensuring they understand exactly what they want to achieve. By incorporating specificity, one can outline the necessary steps to reach the goal, while measurability allows for tracking progress and making necessary adjustments. The emphasis on attainability ensures that goals are realistic and achievable, providing motivation and preventing frustration. Relevance ensures that the goals align with one's values and long-term aspirations, while a defined time-bound timeline adds urgency and focus to the goal-setting process.

Applying the SMART criteria leads to more structured and intentional planning, which is crucial in managing finances effectively. Vague and broad goals can lead to confusion and a lack of direction, focusing solely on short-term objectives may undermine long-term financial health, and ignoring personal values can result in pursuing goals that do not bring personal fulfillment or meaning. Thus, the SMART criterion is essential in sound financial planning.