Financial goal for February: Set SMART financial goals

With the hype of New Year resolutions already wearing off, it can seem impossible to reach our financial goals. This blog explains the importance of setting SMART goals to get a head start on 2020.

Maybe your goal for 2020 is to pay off debt or save more money. While these are great financial goals, they are vague and hard to achieve with no actionable plan. The key is to get SMART about your goal setting so have a clearly defined plan to reaching your goals.

What are SMART goals?

SMART goals are goals that are Specific, Measurable, Achievable, Realistic and Timely. These simple criteria allow your vague goals to become actionable plans.

For example:

Instead of “Pay off debt,” be specific with “Pay off $5,000 of debt.” You can get specific with the amount but also with your reason why and how.

A goal that’s measurable will allow you to track how far you’ve come to reaching it. Set the amount, break it down and figure out a way to track your progress. Track all extra debt payments in your planner and review monthly.

Be sure your goal is achievable by making a strategy as to how you’ll reach this goal, such as breaking the total into biweekly payments from your paycheque or taking on a second job. Find small ways to save, such as packing your lunch or not buying coffee and track how much you save. Find an accountability partner to keep you on track.

It also needs to be realistic. Instead of promising to pay off $50,000 of debt, opt for a more realistic amount for your financial situation. Challenge yourself but keep your goal within reach.

Make sure your goal is timely. Instead of “Pay off $5,000 of debt,” set a date to achieve your goal such as “Pay off $5,000 of debt by the end of 2020.” 

FINANCIAL GOAL IDEAS

Still not sure what goal you should set for 2020? Here are some ideas:

  • Save $5,000 for an emergency fund by July. How? Sell household items that are no longer used.
  • Save $150 each pay cheque for a winter vacation by December. How? Cancel unnecessary subscriptions.
  • Start investing $300 per month into an RRSP. How? Get a second job.

ADDITIONAL INFORMATION

For more information on goal setting for retirement, be sure to check out CPA Canada’s The Procrastinator’s Guide to Retirement.

KEEP THE CONVERSATION GOING

What financial goal are you setting for 2020? Post a comment below.

 

Disclaimer

The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

About the Author

Kathryn Yanchycki, CPA

Kathryn is a CPA and financial literacy volunteer from rural Manitoba. She has worked in various public accounting firms and is currently a wealth management advisor for Sunrise Credit Union.