Level 8 - You have written down your financial goals, and you know how much you need to save for how long to reach them.
Why it Matters
Remember in Level 1 where you got clear on what you wanted your money to do for you? Now that we’ve tackled debt, emergency savings, and retirement, we can think about how your can help you enjoy what you are most passionate about. This could be saving for a down payment, a big trip, a child’s education, a house, a sabbatical. Writing it down and being clear on what amount you are saving at what frequency can help you stay on track to realize your goals.
Goals for this Level
In Level 8 we want to:
Make sure that you’ve written down key financial goals in a SMART format
Make progress on this goal in the next 48 hours
1 - Write Down Goals in a SMART Format
We talked about SMART goals in Level 1, where we established what your money is for and how it can help you do more of what’s important to you. You might want to revisit the sentence you had in Level 1, it said:
I want to [insert SMART money goal] so that I can [insert why it’s important to you].
In this level, we want to take it a step further.
First, try expanding on your goal from Level 1. For example, would you like to purchase a home? A vacation property? Would you like to be able to travel the world? Don’t worry about making it perfect, just capture the general ‘gist’ of your goals.
Second, try re-writing it to make sure your goal is specific, measurable, attainable, relevant, and time-based. For example:
Specific: What are the details about the goal? Instead of “save for a house” try “save enough for a 20% down payment”
Measurable: How will you know how you are doing? Instead of “save for a vacation” think “save $10,000 for my dream vacation across Asia”
Attainable: Is the goal realistic? Instead of saving 20% of a down payment for a vacation property when you’re currently at 1%, think about milestones like hitting 5%, 10%, and 15%.
Relevant: Is the goal important to you? How will it help you achieve what’s important to you? Are you saving for a major vacation to keep up with the Jones’ on Instagram, or because you really enjoy exploring new places?
Time based: When will you start your goal? When will you finish it? Instead of “help pay for my child’s college education” try “Have $5,000 saved by my child’s 5th birthday”. Start dates are key because you may want to prioritize your goals. For example, you may want to save a 20% down payment for a home before putting a penny towards that sabbatical in Europe. Use start and end dates to stay focused and prioritized on what matters most.
2 – Make progress on this goal in the next 48 hours
We don’t want to fall into the New Year’s Resolutions trap of writing down great SMART goals that fizzle before they get started.
Instead, we want to build momentum towards meeting your goals by taking some step towards completing it within the next two days. That’s right, in the next 48 hours, we want you to make progress towards your goal so you have a quick win.
For example:
Saving for a down payment? In the next two days, you could:
Set up a dedicated account JUST for the down payment to track your progress,
Set up an automatic transfer of 1% of your paycheck into the account,
Research the mortgage pre-approval process
Saving for a dream vacation? In the next two days you could:
Sketch out a rough itinerary to double check if your savings goal matches what you’d like to do,
Look into travel rewards credit cards to see if there’s anyway to get a boost on your everyday spending,
Research ways to more cost effectively visit your dream destination
Saving for a college fund? In the next two days you could:
Check the allocation on your current RESP to make sure it matches your time horizon
Set up an automatic transfer of just 1% of your paycheck
Write down the RESP account details so that they are readily available if friends or family ask about gift ideas
If you can fill out the table below, you have crushed Level 8:
Your Goal: | This goal is important to me because... | Make it specific, measurable, attainable, realistic, and time bound. | Quick win plan: |
e.g. Save for a cottage | e.g. I value time with my immediate family and want to have a place we can always enjoy together | e.g. Save $50,000 for a down payment by 2030 | e.g. Set up a separate account and a 1% automatic transfer each paycheck |
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*Untangle Take
We love the clarity that comes from having goals and taking action towards them quickly before they fall off of our radar. At Untangle we are less worried about having specific goals, or if they follow the SMART format. We suggest our Mini if you just want to have a place to START when it comes to your money. We will show you what your numbers today say about where you're heading in the future. And then we show you how making changes to your numbers impacts your future in real-time.
What's next?
Stay tuned every Thursday for a new level in the series!
In case you missed it:
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