To set effective financial goals, use the SMART criteria: Specific: Clearly define what you want to achieve. Measurable: Quantify your goal to track progress. Achievable: Ensure your goal is realistic and attainable. Relevant: Align your goal with your financial needs and values. Time-bound: Set a deadline for achieving your goal. Example: "I want to save $5,000 for a vacation in the next 12 months."