Do You Have SMART Goals?

If you followed through with the challenge posed in last week’s blog, you will now have a list of your aspirations.  You may be asking, “Okay, now what?”

The next step is to transform your list into SMART goals.  SMART is an acronym for Specific, Measurable, Attainable, Realistic, and Time-bound.  Although this unique process of turning aspirations into smart goals is unknown to many, it is not difficult to do. Quite often I have people wondering whether they are able to retire.  However, in order to answer their question, I need more details.  When do they expect their retirement to occur? What kind of income will they require?  Retirement is only one example of an aspiration that may be easily turned into a smart goal.  Other examples may be travelling or funding children’s educations.

These samples are taken from our CIFPs’ Financial Planning Practitioners’ Guide.  Notice how much more precise the SMART goal is than the dream.

Dream	SMART Goal
I want to retire comfortably.	I want to retire at age 60 with sufficient resources to be able to afford to spend the equivalent of $50,000 per year.
We would like a vacation property.	We would like to purchase a cabin, surrounded by a few acres, on Vancouver Island within the next five years. We will use it as a vacation property until we retire, at which time we plan to move into it permanently.
We want to prepare for our daughter’s future education.	We want to accumulate sufficient funds by the time our daughter turns 18 to be able to pay 50% of the cost of obtaining a Bachelor of Science degree at an out-of-province university for 4 years. We feel that our daughter should be responsible for the remaining costs.
We want to be protected in case Harry (the main breadwinner) dies.	In the event of Harry’s death, we want to be able to maintain our family’s current standard of living until the children are 19 years old, and until Mary’s (Harry’s wife) death. We would also like the children to receive a legacy of $50,000 upon their 19th birthday to use for education or starting a business.

Now it’s your turn to transform your list of aspirations.  Do they need to be tweaked to ensure they are SMART goals? If you require further help, click here about Personal Goal Setting at Mind Tools®.  

In addition to your financial goals, you may set goals in all important areas of your life (example: career, education, family.)  Even though your initial thought may be to improve your financial status, you may discover changing career or getting a job promotion by furthering your education leads to personal satisfaction as well as an increase in salary. You can see how your aspirations can be intertwined.  

Commitment to your goals, dreams and aspirations is a requirement for them to become reality. Since the new year has only just begun, stay focused.  It’s encouraging to know that Rome was not built in a day. This common phrase implies that you require patience as you work towards your destination. Now that you know what you want to accomplish and why it’s important to you, the next step will be to examine any problems and balancing opportunities. Henry Ford said, “Obstacles are those frightful things you see when you take your eyes off your goal.”  Like I mentioned, stay focused as you work through the appropriate steps to achieving your dreams.

Six Main Steps of the Personal Financial Planning Process