Setting Financial Goals

Turn "One Day, I'll..." Into "Day One, I'll..."

TL;DR - Goals In A Nutshell

• SMART goals turn wishes into reality

• Have a maximum of 3 goals to focus on

• Automate what you can

*Coming January 2025

The "Goal" Trap

How many times have we heard the classic new year's resolution that we're going to "get fit", only for the enthusiasm to wain as quickly as it came? By February, it's a distant memory and we're still paying a gym membership. It doesn't have to be like this.

So why do goals like this inevitably fail?

It's because they are too vague and when you have vague goals, it is all too easy not to take action and then fall back into previous habits.

We don't want that for you so let's turn these vague wishes into small, tangible SMART goals.

Make Goals SMART

When all you have as a goal is to "get fit", or (as this is a money website) "save more", there is no specific target to aim for, no timeline, no way to measure it, is it even achievable or relevant?

This is where you need to convert these ideas into SMART goals:

• Specific - e.g. how many £ do you want to save?

• Measurable - how will you measure the progress?

• Achievable - what do you need to do to make it achievable?

• Relevant - what is this goal for?

• Time-bound - when do you want to complete this goal by?

Here's one example of a SMART goal but feel free to use it as a template for your own. The elements of the SMART goals are in brackets:

• I want to save £1,200 in a cash ISA (specific) by 31st December 2026 (time-bound) by saving £100 per month (measurable), cutting back on nights out (achievable) so I can enjoy a lovely holiday in the countryside with my family (relevant)

Your 3 Goals

Now it's your turn. Pick 3 money goals to aim for over for different term periods and nail it! Here are some examples:

• Short term goal: no longer than 12 months (e.g. £1k emergency fund)

• Medium term goal: 2 to 5 years (e.g. £5k big holiday)

• Long term goal: 20 years+ (e.g. £100k pension pot)

Start with one goal to begin with, complete it and then tackle your next one.

Automation Magic

There's a saying that gets brandished in the money world which is "set and forget". This is the concept of automation and is a very useful life hack to take the thinking away from saving so it just happens.

Can you imagine trying to remember to pay all your bills manually? That's too energy intensive and prone to risk of missing payments. We don't want that.

We automate payments to other people's accounts via direct debits. So we can adopt the same approach and automate payments to our SMART money goals.

Once you have decided the amount and frequency of payments, create an automatic payment from your current account into your savings account and check back at the end of the time period.

So in our SMART goal example above, £100 per month will be sent to a savings account for 12 months to build up to £1,200.

Set and forget. Simple

Action Plan

Your homework and SMART goal action plan is

• Pick one goal

• Make it SMART

• Set up an automatic payment to a savings account to turn that wish into reality.

You've got this!