Written by Mai Habib
Wednesday, April 17th, 2019
It's never too late to start focusing on a financial goal. Perhaps you already have goals in mind, or have gotten them started? Have you stopped to check in on your financial goals? Are they still on track?
Someone once told me that the best commitment you can ever make is: "signal while changing lanes." That's right — small and simple. Why? Because it's specific. It's definitely achievable. It's on me to take action. It's measurable. And most importantly, it's relevant.
SMART Financial Goals
Stop for a moment to reflect on your current financial goals. Are they SMART? That is, are they Specific, Measurable, Attainable, Relevant, and Time-bound?
If you're reflecting on your plans and find that your financial goals don't meet the 5 measures above, it's not too late. Broad statements like "I will pay off all my consumer debt" or “I will save 10 per cent for a down payment," are a good starting point, but you need a road map to get you there. "One-day" plans won't help much.
Let's say your current money dreams are related to home ownership. Here's how you can make sure your goal is SMART:
Specific: How much do you want to save and for what? Maybe you'd like to save a 10 per cent down payment for a two-bedroom home. Let's say that 10 per cent down payment will equal about $40,000.
Measurable: Can you measure your financial goal against set targets? For example: "I'd like to buy a place within the next 3-5 years. I'll need to save $40,000 within that time frame."
To get to that financial goal, decide your current saving options:
- save $1,112 a month for three years
- save $834 a month for four years
- save $667 a month for five years
Then plan how you'll track progress: "I will have checkpoints every 6 months to ensure I'm on track." There may be months when you have more money to save, and other months where you won't be able to reach your savings goals. And that's fine, but by setting a target, you'll be better able to plan ahead and stick to your plan as best you can.
Attainable: Be realistic with your timeline. If your salary is $60,000 gross (before tax), it's very unlikely you'll be able to save $40,000 in one year. Set yourself up for success. Give yourself a reasonable time frame to get there. Do you have a partner or spouse? Can you each put away half of the amount you calculated per month?
Relevant: Is this goal relevant for you? Reflect on the reasons why you're interested in making that purchase. Does it line up with other goals in your life, financial and otherwise? You'll be better able to reach your goal if you're motivated.
Time-Bound: This is the "when" factor, which is a very important point in achieving your dreams, without getting discouraged. Put a realistic timeframe on your financial goals. Don't push yourself too hard, but also have a good idea for when you'll want to reach your target.
Don't Get Discouraged When It Comes to Reaching Your Goal
Whatever your financial aspirations are, you can get there. Go through your financial goals and if they're not SMART, it's never too late to put a game plan in place.