How ‘SMART’ are your Financial Goals?

2020 was truly that make or break year, if our own personal finances did not take a hit the impact was known and felt within our friends and family circles.

Undoubtedly, there is a greater appreciation for the importance of financial planning so let's keep that momentum going.

It's that time of the year when we embrace the habits we are trying to make (or break), putting up those beautifully crafted vision boards or simply finalising your goals for the New Year. 

Chances are a few personal finance goals have made their way onto your list for 2021. However, for the vast majority of the population results show that personal finance goals are often left unaccomplished each year. If you’ve been struggling to meet your goals year after year and are in pursuit of more positive results consider taking the 'SMART-er' approach.

The SMART method:

Applying this methodology to personal financial goals could serve as a reminder, tighten up loose ends, or completely transform your goal setting process.

SPECIFIC

Being specific is where most people get it right. This is stating the action of what we hope to achieve. Typically for most people this sounds a lot like ‘I want to save more money’ or ‘I want to be debt free’. The problem here is that a hopeful intention is set with no finish line in sight; in this absence of a finish line the race can feel elusive.

Goals need to be much more than specific to warrant our full commitment.

MEASURABLE

When setting a goal, ensuring that you incorporate metrics to evaluate progress is important. You wouldn't want to find yourself struggling to play catch up in the last months of the year. Often times at this stage it is too late and too stressful to try to hit your target.

Setting milestones with periodic reviews give us a chance to determine whether we are on track and if we aren’t, allowing us sufficient time to make the necessary adjustments.

ACHIEVABLE

This is the most common reason why individuals fail to meet their goals. The goals set were not achievable from the start, you have set yourself up for failure.

Instead, set goals that are challenging but within your reach. For example, having a goal to save 40K with an income of 50K is not only challenging but impractical. A better approach would be set a goal to save 6K or 15% of my annual income.

RELEVANT

Keeping your goals relevant solidifies why this goals matters to you. It could be that you have your eyes set on an early retirement which requires you to save more or maybe saving for a future life event such as children or the purchase of a home. Whatever that goal may be it must fit with both your immediate and long term plans. 

TIMELY

By setting timelines such as: by June 2021 or by December 2021 makes all the difference and increases your chances of success.

If tasks are not assigned a due date they tend to be labelled, whether intentionally or unintentionally, not as important and falls to the bottom of our priority list. Time constraints have the added affect to jump start us into action.

Have you been incorporating ALL of the criteria of the 'SMART' method? Take this time to reassess your goals and tweak if need be.

Happy goal setting!