If you need a concrete tool to help you fulfil financial goals, the SMART and SMARTER acronyms may just be what you need!
A goal is a dream with a deadline.
Napoleon Hill
Some of you may have heard of the “S.M.A.R.T. way to write management’s goals and objectives” developed in the early 80s by George T. Doran It is a system that has helped business people and managers set short-term and long-term goals and objectives in very concrete ways. While Doran gets full credit for this acronym, David has adapted it for our coaching clients. Having specific, measurable, achievable, relevant, and time-based goals in personal finance is extremely helpful and provides an environment for financial success. Writing down this acronym and detailing your objective is also essential, as is hanging it in a prominent place in your home as a reminder.
Specific—Drill down to make your goal as specific as you can.
Measurable—Keep asking quantifiable questions to measure progress. How much time? How much growth? This is about tracking with benchmarks.
Achievable—Is the goal achievable?
Relevant—Does it line up with the values and direction of where your “financial compass” is pointing? Does it move you closer to where you want to be or is this a detour?
Time based—Set a specific time frame to evaluate your progress.
Evaluate—Is this objective relevant? What changes, if any, need to be made as you progress through the process? Where are the victories, challenges, or changes I see?
Reward and Repeat—Pause and celebrate the achieved goal. Review the steps you have taken to get where you are, knowing that you will start all over again with another SMARTER goal to achieve.
| Here is an example: S—I will build an emergency cushion of $1000 within three months. M—I will put $350 each month into a separate emergency cushion account from my paycheque, from second-hand items I sell, and from working an extra shift each month for three months. A—$350 saved each month means a total of $1050 after three months. R— This is an important facet of my journey toward financial wellbeing. Instead of using credit for emergencies, I now have this cushion that helps break the cycle of debt accumulation due to unexpected emergencies. T—I will do this in the next three months. March 31 is my deadline. E—There are some questions to consider:Will I be able to get the extra shifts I need? Will I be able to sell the second-hand items to generate the extra income needed to build the cushion? Will I be able to reduce my current spending to free up extra cash flow? R—I will call a friend and take her for coffee when my emergency cushion reaches $1000.According to the Financial Fitness Seminar I attended at More Than Enough, the next goal is to create the debt payoff strategy using the money that funded the emergency cushion. I will reach out to my coach to help create the strategy. |
Note: It is important for you to realise that if you have a larger financial goal in view, you may need to accomplish smaller goals first as part of the process of reaching the larger goal. It might be helpful to pursue a step-by-step strategy in which you focus on those initial steps as goals within the bigger objective. For instance, in the above example, you may need to create a SMARTER goal strategy in setting up an account for your emergency cushion before you do the work of saving the $1000 over three months.