Financial Essentials: The Plan

Leah Heath and Nick Lawman

Published on:

March 22, 2021

Now is the perfect time to start thinking about your goals for the future. You can have ‘wish lists’ about what you want to achieve, but they will stay as ‘wish lists’ unless you hold yourself accountable. You can do this by putting a framework together in writing, focused on what you want to achieve, how you want to do it, and by when.

One of the most effective ways of goal setting is by using the SMART approach.

S – Specific

M – Measurable

A – Achievable

R – Realistic

T – Timebound

Let’s examine each of these characteristics in turn:

Specific- What specific goal is to be achieved? The more detail there is, the better the eventual outcome. An example could be, ‘I want to clear my overdraft and start to put £100 per month into a savings account’. Think about what help you will need, who else could be involved and what could hold you back from achieving your goal.

Measurable– Set a timeline of when you want to achieve this personal goal and ensure there are regular reminders to help you stay on track. This could be anything from a diary or just using sticky notes on the fridge. It is important to measure your progress as well as time, it’s always useful to see how far you’ve come as well as how far there is to go.

Achievable– How ambitious is your goal? You must make sure you tailor your goals to ensure that they are within reach. For example, is retiring next year achievable? For many of us, probably not. Setting overly ambitious goals can be counter-productive and disheartening, so check that they’re actually attainable and you’ll be celebrating the small wins in no time.

Realistic– While being realistic is related to being achievable, it differs in that being realistic is more about having the means to meet your goals. When setting goals you need to think about whether you have the resources to achieve it. By considering this, you give yourself a fighting chance to achieve them. Being realistic is ensuring that things outside of your control can align with your goal. Making sure your targets are realistic is a way of mitigating disappointment and ensuring they are successfully accomplished.

Time-bound- Set yourself a deadline for achieving your goal. This should give you a sense of urgency, although you should avoid giving yourself additional stress, so again, make sure it’s achievable. You can also break your ultimate goal into smaller goals. Each one you tick off will motivate you to tick the next one off, and before long, you’ll be flying towards your end result. For example, your ultimate goal might be to save £1000 in a year. To do this, breaking it down into saving just under £20 a week feels much more achievable and allows you to see the progress you’re making week on week!

It’s important to check in with yourself regularly. Ask yourself these three questions:

·        ‘What can I do right now to support me in reaching my goal?’

·        ‘Where do I want to be in a month’s time?’

·        ‘CouId I be doing anything extra to help me progress?’

It does not matter about the size of the financial goal. What is important is the sense of achievement you’ll feel in the plan being successfully completed.

Next time, we will look at the financial freedom that comes from planning and freeing up funds to perhaps achieve longer term financial objectives.

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