How can I make smarter money goals?

Words are like a set of blocks we can use to build structures.

I find this analogy useful in constructing goals – in particular, financial goals.

Having a set of well-defined goals is important. A goal that is too open or ambiguous cannot possibly be ‘SMART’ – that is, Specific, Measurable, Achievable, and Realistic within a particular Timeframe. Think of each one of these elements as a building block.

Imagine your goal is to save money.

‘I will save money’

Without some concrete definition, a goal cannot be specific, and it must be specific in order to be measurable.

‘I will save $5,000 in a high interest account’ is specific and measurable.
‘I will save money’ is not.

There must also be a time frame in order for a goal to be measured.

‘I will save $5,000 in a high interest account by the end of this year’ can be evaluated for success on a predetermined date.
‘I will save $5,000 in a high interest account’ alone cannot, and is destined to flounder on into the future.

Measurement of progress over time can provide comparisons and tracking to assess how realistic and achievable the goal is. This can be hard to determine at the outset, especially if it is the first savings or debt reduction goal you have set, so it is important to monitor your goal, measuring the outcomes over the timeframe set, and adjusting the specifics as necessary.

It is only if all of these concrete elements are combined that one can judge whether the goal has been achieved or whether further work or reassessment is needed. Any of these elements can be adjusted (including the specifics – e.g. change from shares to real estate, the time frame, etc.) according to need and the constant tracking.

But is there such a thing as too much detail?

One of the reasons I believe we are often hesitant to describe our goals in too much detail is a fear of failure.

A goal like ‘I will save money’ is much easier to satisfy. You could set aside a 5c coin you found under the couch and claim to have achieved your goal.

A goal like ‘I will save $5,000 in a high interest account by the end of this year’ requires, at a minimum, you to sit down on December 31, open your high interest account, and see if your balance is at or above $5,000. (Ideally, it will involve lots of little checks along the way, monitoring your progress and making adjustments – either to the goal itself, or to your behaviour – as necessary).

The opportunities for failure with a well-designed goal are many: You could get to $4,999 instead. You could reach your goal – but in January. You could save the $5,000 by December, but neglect to open a new account and miss out on bonus interest rates.

That’s why having a SMART goal can be scary.

But to return to our building block analogy…

The well-defined goal is like a brick wall.

There are a number of blocks, and if one breaks (e.g. the ‘one year’ timeframe, or the ‘$5,000’ amount), you can easily replace that broken brick with a new brick (e.g. ‘18 months’ or ‘$2,000’) and still have a strong wall.

Bricks

A poorly defined goal that lacks detail and substance is like a pane of glass.

Because there are no elements to separate out, just a vague statement (e.g. ‘I will save money’), if the glass breaks, the whole thing becomes useless – or even dangerous – the sense of failure being like shards of glass – and you have to start all over again. If your sense of failure is too great, you might even not bother to replace the glass at all and simply board up the window (I’ve really taken the analogy too far now, haven’t I?)

So even though it can be scary to be specific about what you want, you can create a more robust goal and give yourself more opportunities for success by monitoring and being flexible with your goal, adapting to changes in your circumstances.

20GoalsWhat is your SMART goal?

Find ways to keep on track with your goals.

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Today’s featured image is a notebook given to me by a wonderful friend, and the Enrichmentality ‘life list’ – a list for your life, not for your shopping – decorated with a beautiful hibiscus I picked in our hotel garden!

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