How to set clear financial goals and win at life

Following last month’s article, which focused on why clear financial goals can help you succeed, it’s equally important to know how to set goals.

Read more: Winning at life: Why having clear financial goals could help you succeed

The key to setting meaningful financial goals is realism. Focus on setting goals that you can stick to and making a practical plan to help you achieve them. 

Here’s how adopting the SMART approach could help.

5 steps to setting SMART financial goals

A common interpretation of the SMART acronym and the one I advocate for is: 

• Specific

• Measurable 

• Achievable 

• Relevant 

• Time-bound 

Here’s how to approach each in turn and why you may find success with this structured method. 

1. Specific – Set clear goals that matter to you and your future

Avoid vague notions like “I’ll save more” or “I’ll be more mindful with my spending” and get clear on the facts.

Think hard about what you want and then structure your goal to match. 

For example, instead of saying “I’ll save more” set an amount you’ll save and how often: “I’ll save €250 into my high-interest savings account every month and contribute another €250 to my pension, boosting the family emergency fund while growing my pension pot.”

Your specific goal will depend on your priorities, but you may find it useful to set separate goals for each area of your financial life. 

2. Measurable – Use numbers and deadlines to track your progress

Knowing where you are in meeting your goal can help keep you motivated. Better still, it creates the opportunity to celebrate milestones along the way.

To make your goals measurable:

• Use numbers and percentages (remember, specificity is your friend!).

• Break down long-term goals, such as saving for retirement, into trackable milestones.

• Set a realistic time frame for when you’ll achieve the goal or reach each milestone (where applicable).

• Settle on a precise figure that represents success.

Then, set a regular date to mark when you’ll return to see how you’re progressing. By their nature, financial goals take time to come to fruition, so I’d recommend checking in no more than once a quarter.

3. Achievable – Make sure your goal is challenging but also realistic

The key to success is to set a goal that is achievable yet challenging enough to make a meaningful impact on your long-term financial success.

When setting goals, make sure the amount you want to set aside works alongside:

• Your income and regular household budget

• Other financial commitments – for example, supporting dependants or managing debts.

Make sure you build in some flexibility, too – your good intentions may falter if you lose your job, you have to pay for expensive car repairs, or if ill health impacts your earnings.

Don’t beat yourself up if you have to pause pursuing your goals, but be sure to pick up where you left off once you’re back on an even keel.

4. Relevant – Align your goals with your values and long-term expectations

A clear understanding of why any specific goal matters to you can make it easier to stick with the plan. So, take time to tie each of your financial goals to something that is important to you. 

For example, you might want to:

• Buy a house or second home

• Take your family on a trip of a lifetime

• Enjoy a comfortable, worry-free retirement.

If in doubt, make it a team effort and talk to your partner and family to see how you could make your goals fit into your lives.

5. Time-bound – Set a date for when you want to achieve your desired outcome

Defining a specific end date – even if it’s far in the future – can help to focus the mind. A clear deadline for both regular check-ins and the final milestone will keep you accountable.

• Use a specific date or age – pinpoint precise timing for when you will achieve your goal.

• Marry the deadline to the goal – if your goal is to save for a comfortable retirement, you might want to ensure you’ve accrued a set amount at a certain age.

• Be firm, but not rigid – life rarely progresses in a straight line, so build in some flexibility and be ready to adapt your time frame if your circumstances change.

Setting goals you’ll actually stick to, and that move you closer to where you want to be, is a skill like any other. 

To find out more about how to make the most of using SMART goals in your life, read the recent guide. Download your copy here: SMART goals: 5 steps to effective financial planning

I’m here to help you set and achieve your financial goals

If you’re keen to set SMART financial goals that will make a meaningful difference to you and your family, please get in touch.

Email rory@brazilfinancial.ie or call +353 86 824 7542.

Please note

This article is for information only. It does not constitute advice.

It describes financial planning services that Brazil Financial Planning can offer to you. Financial planning services are not regulated by the Central Bank of Ireland.