SMART goals
Now let’s identify some specific financial goals based on what is most important to you.
You are more likely to reach your financial goals if they are SMART goals:
Specific: When setting a goal, be specific about what you want to accomplish. Think about this as the mission statement for your goal.
Measurable: When setting a goal, think about how you are going to determine if you meet it. This makes a goal more tangible because it provides a way to measure progress.
Achievable: When setting a goal, think about how to accomplish it and whether you have the tools/skills needed. Consider what you can do to make your goal possible and determine if you need to develop new skills.
Relevant: When setting a goal, consider why you want to reach it. Make sure it aligns with what is important to you.
Time-Bound: When setting a goal, decide on a realistic deadline for achieving it. Make sure you are patient when working toward achieving your financial goals.
It is important to be realistic with yourself. By being too ambitious, you may risk not meeting your goal and therefore becoming discouraged.
Transcription — SMART Financial Goal Example 1
[Steve is sitting at the desk in his home office and he is writing in a notebook.]
Narrator: This is Steve.
[The screen splits in half and on the right side of the screen the word ‘SMART’ is written vertically. The following words are written next to each of the letters in the word ‘SMART’: ‘Specific’, ‘Measurable’, ‘Achievable’, ‘Relevant’, ‘Time-bound’.]
Narrator: Steve is trying to a set a SMART financial goal. His ultimate goal is to have financial security.
[The scene changes to a close-up of Steve’s hand writing in his notebook. Steve writes the following: ‘Financial goal = financial security’.]
Narrator: He recognizes that the goal of having ‘financial security’ is very vague and would be difficult to measure.
[The scene changes to an image of Steve standing on the right side of the screen next to an illustration of an arrow moving upward and downward.]
Narrator: Steve won’t have any way of knowing whether or not he is making any progress with achieving this goal.
[The scene changes back to Steve writing in his notebook. Underneath where is says: ‘Financial goal = financial security’, Steve writes the following: ‘S.M.A.R.T’.]
Narrator: Steve must work to turn his goal of having financial security into a SMART goal.
[The letter ‘S’ within the word ‘S.M.A.R.T’ in Steve’s notebook is coloured in red.]
Narrator: Steve begins by making his goal specific.
[The scene changes to an image of a first-aid kit with money sticking out of the top. The words ‘Emergency savings fund’ are written above the image.]
Narrator: He wants to save for an emergency fund.
[The scene changes back to Steve writing in his notebook. The letter ‘M’ within the word ‘S.M.A.R.T’ in Steve’s notebook is coloured in red.]
Narrator: Then he attempts to make it measurable.
[The scene changes to an image of the first-aid kit with money sticking out of the top, and the words ‘Emergency savings fund’ written above the image. The amount ‘$4,500’ is written below the image, and an image of a calendar appears with the term ‘5 years’ written next to the calendar.]
Narrator: Steve wants to save $4,500 in 5 years. Therefore he will need to save $75 per month on average.
[The image of the first-aid kit shifts to the right and the term ‘$75/month’ appears on the screen.]
[The scene changes back to Steve writing in his notebook. The letter ‘A’ within the word ‘S.M.A.R.T’ in Steve’s notebook is coloured in red.]
Narrator: Steve then analyzes whether or not this goal is achievable for him.
[The scene changes to an image of a clip board with a piece of paper attached titled ‘Expenses’. Underneath the word ‘Expenses’ there is a list with the following items: ‘Housing’, ‘Food’, ‘Payments to LIT/estate’, ‘Transportation’, ‘Entertainment’, and ‘Emergency savings’. The piece of paper titled ‘Expenses’ is stamped with the word ‘PAID’. To the right of the clipboard there is an image of a paycheque. Below the paycheque there is an arrow pointing downward toward an image of a first-aid kit with money sticking out of the top. The words ‘Emergency savings fund’ are written above the image of the first-aid kit. Money moves from the paycheque to the first-aid kit.]
Narrator: He decides that he will be able to put aside $75 per month after paying for all of his monthly expenses.
[The scene changes back to Steve writing in his notebook. The letter ‘R’ within the word ‘S.M.A.R.T’ in Steve’s notebook is coloured in red.]
Narrator: This goal is relevant for Steve because an emergency fund will help him to avoid tripping into a debt trap.
[The scene changes to Steve walking across the screen and falling into a hole. Negative dollar symbols appear on the screen.]
[The scene changes back to Steve writing in his notebook. The letter ‘T’ within the word ‘S.M.A.R.T’ in Steve’s notebook is coloured in red.]
Narrator: Steve also ensures his goal is time-bound because he has a monthly target of $75 and a five year target of $4,500.
[The scene changes back to the screen with ‘$75/month’ written next to the image of the first-aid kit with money sticking out of the top. The amount ‘$4,500’ is written below next to an image of a calendar and the term ‘5 years’. ‘$75/month’ and ‘5 years’ are both underlined.]
[The scene changes back to Steve sitting at the desk in his home office. The screen is split in half and on the right side of the screen the word ‘SMART’ is written vertically. The following words are written next to each of the letters in the word ‘SMART’: ‘Specific’, ‘Measurable’, ‘Achievable’, ‘Relevant’, ‘Time-bound’.]
Narrator: Therefore Steve has successfully created a SMART financial goal.
[The right side of the screen slides across to the left to cover the entire screen.]
[A piece of paper appears on the right side of the screen where Steve writes the following: ‘$75/month for 5 years = $4,500 in emergency savings fund’.]
Narrator: Steve’s SMART financial goal is to: “Save $75 each month over the next five years for a total of $4,500 in a savings account for the purpose of an emergency fund”.
[The scene changes to Steve sitting in an office setting with his BIA Insolvency Counsellor.]
Narrator: Make sure that your financial goals are SMART. At your in-person counselling session discuss SMART financial goals with your BIA Insolvency Counsellor.
SMART goal example
“Having financial security” is a very vague goal and is hard to measure. How will you know if you are making progress or if you have achieved your goal?
“Saving $75 each month over the next five years, for a total of $4,500 into a savings account for an emergency fund” is a SMART goal.
It’s Specific: You know exactly what you are savings for (an emergency fund).
It’s Measurable: $75 each month, totaling $4,500.
It’s Achievable: Is $75 each month achievable for you?
It’s Relevant: An emergency fund helps you obtain financial security.
It’s Time-bound: You have a monthly target of $75 and a five year target of $4,500.
Debt-trap: a situation in which a debt is difficult or impossible to repay. This is often due to high interest payments, which make repayment impossible. Payday loans, for example, often lead to a debt trap. A payday loan is an amount of money borrowed at a high interest rate which the borrower agrees to pay back to the lender when the borrower receives their next paycheque.
A great way to reach longer-term goals is to break them down into shorter-term goals. Breaking up your longer-term goals into multiple shorter-term goals makes it easier for you to measure your progress.
Financial goal setting tool
Financial goal-setting tool
It is now time for you to set your own financial goals!
Please download the interactive financial goal-setting tool. Take a look at the list of financial goals and identify the ones that are most important to you.
Select and prioritize your top three post-insolvency financial goals and fill in the blanks with your personal goal information. If you cannot find three goals from the list which are important to you, use your own, but make sure they are SMART.
Bring your list of financial goals to your in-person counselling session. You will discuss your financial goals and set a plan to achieve them with your counsellor.