What are your life goals? What are your financial goals? When you look at financial planning as a holistic exercise, you will find many of your life goals have a financial component to them. The setting of life goals and financial goals should go hand in hand.
Besides writing our goals down, we know one of the best ways to increase the odds of accomplishing our objective is to create SMART goals. By this, we mean the goal should be:
- S – Specific
- M – Measurable
- A – Achievable
- R – Realistic
- T – Time bound
You should use these same rules when creating financial goals such as planning for retirement, funding your child’s college education, or scheduling that big anniversary trip.
In fact, I am working on the final touches of our anniversary trip now. You see this year Angela and I will celebrate 25 years of married bliss. By sharing our approach, I hope to illustrate how the S.M.A.R.T. technique is used for financial goal setting.
S – Specific:
- We knew the trip should be one we both would enjoy, so Angela quickly ruled out camping in Alaska. We started out over a year in advance discussing possible destinations. After about 4 to 5 months of debate, we came up with three dream locales (China, Australia/New Zealand, and a Coast-to-Coast tour of Canada).
M-Measurable
- We both understood, with any trip we needed to stay within our budget. We had a travel agent provide input and price out our three destination choices. After some price checks, the Australia/New Zealand choice was eliminated.
A – Achievable:
- Once we started looking at the number of consecutive vacation days we could take, China was eliminated as one of our choices. China is a large country and to really soak in the culture of this great destination. We felt it would require more days than we could comfortable take. With this decision, we now have another item to add to our retirement bucket list.
R –Reasonable:
- The goal of a coast-to-coast tour of Canada was an ambitious task. The concern was would it leave us too tired to enjoy the beauty of the country. At this point in our selection process, we decided to apply some common sense and reduce the miles of our journey. We revised our goal a bit and pared the destination down to the resorts of the Canadian Rockies. This allowed us to add some wonderful excursions in the places we plan to visit. Next Angela threw in a bonus treat for me. She suggested we also visit Big Sky Country. Montana has long been a dream destination for me.
T –Time Bound:
- For the trip to be a wedding anniversary gift to ourselves, we wanted the travel to be near our anniversary date. The other bound was to have the trip be in commemoration of our silver anniversary. This meant the travel needed to happen in 2014.
I hope that you can can see how we used SMART goal setting to accomplish this life goal. As stated earlier, when setting life goals, they usually involve financial implications. As you can see, our 25th wedding anniversary trip goal had a major financial component to it. When you are making plans for your life goals (a wedding, college planning, a baby, switching jobs or retirement), I suggest you consider the financial implications and set SMART goals.
What are some of your life and financial goals? Do your goals meet the criteria to be a SMART financial goal?
Author
Isaac is a Fee-Only (no products sold) Certified Financial Planner® Practitioner. Isaac founded Stalwart Financial Planning with offices in Fayetteville NC and Durham NC. Isaac provides comprehensive planning and investment management services to individuals from all walks of life. Isaac can be reached by phone at 910-867-8464, or by email (iallen@StalwartPlanning.com). Visit him at Stawart Financial Planning www.StalwartPlanning.com.