Simple Certainty | How To Set Financial Goals and Achieve Them
How many New Year’s Resolutions have you kept? If you’re like the vast majority of us, not many (if any). Goals are easy to set, but seeing them realised is something else altogether. The good news is that improving your success rate might be as simple as getting SMART.
I’m a big believer in planning and goal setting. Progress equals happiness for us human beings; we need to feel like we’re working towards something and ticking things off along the way. Given that financial security is also a huge factor in our happiness, setting financial goals and meeting them is an important skill to develop.
One method I’ve found to be effective over the years is the SMART method. Let’s take a look at its guiding principles.
Time to get SMART
Be specific. The worst thing you can do when setting your goals is make them vague or overzealous. Drill down into the specifics. What do you want? Are you looking to have a certain amount tucked away as a nest egg? Do you want to be generating a certain level of income? Whatever it is, make it real and make it specific.
Make it measurable. Financial goals are usually long term projects, which can make them harder to stick with. It’s important, therefore, that we can measure our progress and see ourselves working towards the goal. The end result may be several years ahead, but if we can see progress along the way, we’re far more likely to see it through.
Make it achievable. No goal is worthwhile if it doesn’t take much to achieve it, but we shouldn’t set our sights on something out of our reach. You may have to push yourself, but make sure your financial goals are achievable.
Be realistic with yourself. You have to work towards your goals. In order to see them realised, you may need to change something about your current behaviour or situation. Are you willing to do this? Can it be achieved by raising your current standards?
Last of all, give your goal a timeframe. Without an end date, we meander, procrastinate and, eventually, give up on the idea altogether. Give your goal a due date. When does your nest egg need to be at that level? When do you need to be generating that income by? This all harks back to the first step of being specific. Drilling down is one of your best tactics when making and achieving financial goals.
Give yourself early wins
Being SMART isn’t all there is to it; it’s simply a sound strategy to adopt, but even good strategies don’t guarantee success. Unfortunately, there is no silver bullet.
Financial goals are different to most others; they tend to span years, sometimes decades. That’s a lot of time to lose heart or motivation or to simply procrastinate. To stick with it, you need to give yourself an early win. The sooner we see progress, the more enthusiasm we’ll have for the plan and the longer we’ll stick with it, increasing our chances of success. It doesn’t have to be a big win. At the beginning of your financial goal journey, you might decide to put aside only a small amount of your income (if saving is your goal) just to give yourself motivation that it can be done.
Think of it like one of those ‘couch to 10k’s’ apps. They don’t start off with a 5 km run: they start off with 30 seconds of running and a lot of walking. Being kind to yourself at the beginning will help you stick with it in the long run.
Get a team around you
A good financial adviser can be your biggest weapon when setting financial goals and achieving them. Firstly, we can sit down with you and discuss in detail not only your financial goals but what you want your future to look like. We can then examine your financial situation and help you set some SMART goals. In other words, we can tell whether your aims are realistic.
We can also show you what needs to be done to achieve them. And – perhaps more importantly – we can show you the impact of your moments of weakness. I’ve found that one of the best motivators is demonstrating to clients the impact of their spending on their future. Once they can see the consequences, they find it much easier to remain disciplined.
To set financial goals and achieve them requires specificity, discipline and a team. Don’t go into it with vague or overzealous notions, and don’t go into it alone. Get some expertise on your side so you know exactly what you need to do to see your financial goals realised, and get the motivation to stick with it.
Disclaimer
Please note this is general information only and you should always seek your own personal
advice.