The term goal must be one of the most overused, abused and least successful words in the English language, especially in the corporate world.
It’s why I prefer the less ambiguous term ‘target’ because when we are seeking to make the most of our financial lives it makes more sense.
A target is in one direction. Goals, as on a football pitch, can be at either end. A target is definite with a bull’s eye. A goal again is more diffuse.
But whatever you call them, now is a bad time to make them.
The sad facts are that 80 per cent of us abandon new year’s resolutions within a month, and only eight percent of resolution makers follow through.
The truth is, New Year’s resolutions or goals and even targets mostly fail because:
Many of these resolutions, even for older Australians tend to be around money and usually saving it as opposed to spending it. To achieve any type of money goals, a budget becomes an indispensable ally, so don’t leave home without one. But assuming you have a budget what mnemonic can really help?
While I hate to borrow from the corporate world, they do have some experience in making their goals stick or at least holding others accountable if they don’t.
So, consider setting some S.M.A.R.T.E.R. Goals
Most people are familiar with S.M.A.R.T. goals. Those are goals that are Specific, Meaningful, Achievable, Relevant, and Time-bound.
Setting S.M.A.R.T.E.R. goals takes the process not just one, but two notches up, pushing you to Evaluate and Readjust your approach.
These are two key steps to help you monitor your progress, keep you motivated, and take you over the finish line.
What: be as specific as possible and never be afraid to be too specific. It’s important to make your goal measurable by putting an exact number next to it.
How: instead of saying “I want to start saving this year”, think about (and write somewhere) exactly how much you want to save. If you want to invest, put down on paper the amount and the return you’re expecting from the investment.
What: choose a goal that has deep meaning to you. Think about something that will really improve your life. And don’t compare yourself with anyone else. There’s a very small chance their goal will resonate with you at the core.
How: think about why you are pursuing your goal and focus on the feeling you’ll get once you achieve it. Just saying ‘I will invest’ won’t be enough, but “I will start investing my first $5k, so I can retire at 50 and live off the land” will catapult you right there in front of your eco-house ready to plant that first seed.
What: set a goal that is achievable, but also not too easy to accomplish. For two reasons: something too accessible probably won’t make a big difference to your life. Plus, a little challenge requires you to stay focused and gives you that bit of adrenalin that makes things interesting!
How: consider where you’re starting from and the timeframe you’re giving yourself. If this is your first time following this process, I suggest you start with a one-year goal, such as reducing your debt by 20 per cent or saving enough for a course that will help you get a promotion.
What: a goal needs to be relevant to your life. It needs to be in line with your values, the way you’re living, or what you want out of life.
How: if you’re concerned about the environment, buying shares in companies that offer high dividends but have a dubious environmental reputation will contrast with your values. Investing in an ethical portfolio however, could give you lower returns (and I stress could, because that’s not always the case), but will increase your chances of keeping those shares in the long run.
What: ensure your goal is time-bound – i.e. you know when you want to achieve it. If you have a long timeframe, make sure you break it down into milestones to make the journey less daunting.
How: if you are planning on saving $10,000 by the end of the year, focus on 3-month intervals.
What: an important part of goal setting is to plan when you will evaluate the progress you’ve made towards your goal.
How: set the right frequency. Not too often, as it will make the task tedious, but often enough for you to keep track of how you’re going. Opting for a fortnight review? Make sure you put it in your calendar and don’t let anyone double book that time. And if you need a little trick, use “temptation bundling”, as Wharton psychologist and How to Change author Katy Milkman calls it. Pair the task with something you enjoy, like eating some decadent chocolate cake or listening to your motivational playlist. That will make you look forward to your evaluation session.
What: once you know how you’re tracking, it’s time to readjust your approach.
How: if you’re finding it challenging to hit your milestones, consider changing technique or asking for support from someone you trust. This is also the opportunity to see if your goals were too ambitious or too easy to achieve.
Yes, 2023 can be the year of change. By next December, you could be joining those few who see their resolutions through.
Simply set goals the S.M.A.R.T.E.R. way. Be persistent, but also kind to yourself, and you’ll more likely to get there. Goal or target just be sure to hit it!