Blog - A Goal Without a Plan


Jeff Jones
Lead Financial Planner

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He who fails to plan is planning to fail  – Winston Churchill 

I’ve heard it said that a goal without a plan is just a dream. How often have we set a New Year’s resolution only to see it fall by the wayside before the chill of winter has dissipated? How many times have we vowed to eat better only to sabotage ourselves with the dessert menu or promise to get more sleep only to find ourselves watching late-night television or trying to squeeze in one more chapter of the latest bestseller? Churchill probably wasn’t talking about his New Year’s resolution, but he was spot on in his assessment of personal failure.

We use goals in many aspects of our lives. We set goals for our education and career, for our family, friends, and community. We set goals for our fitness and health and, of course, for our personal finances. Yet, when we fail to put into place a plan to take the steps necessary to achieve a goal, we are setting ourselves up for, well…failure.

This is where SMART goals come into play. SMART is an acronym which lists the criteria we should use for each and every goal we set. I was first introduced to SMART goals over a decade ago and the original idea is attributed to an article written by George Doran in the November 1981 issue of Management Review magazine. It has been updated and expanded a few times since, but the original criteria are as follows:

Specific

Measurable

Assignable

Realistic

Time-bound

Let’s choose a simple goal with which to apply the SMART criteria. For example, “I want to take a European vacation.” That was easy enough, right? The problem is, we have left out all of the specifics, have no way of measuring if we can complete the goal, and have not determined who is responsible for making it happen. Not to mention if we can even afford it or when we are going. Let’s begin applying the criteria to build our goal plan.

Specific: This is usually the “Who?”, “What?”, “Where?”, and “Why?” of the goal. Let’s update the goal to say, my spouse and I would like to take a two-week trip to France. 

Measurable: We need something to determine how we are progressing and when our goal has been met. For this type of goal, we can easily measure the total cost required to complete it. Let’s use a cost of about $10,000. Now that we have an amount, we can easily determine how much money we need to save each week, month, or year to meet our goal when given the timeframe. Let’s use $500 per month savings for our example. We can now measure our savings as we move closer to our trip.

Assignable: Every action required to meet the goal needs to be assigned. In this example, who will ensure the monthly savings is taking place? Who is booking the trip? Be sure that someone is identified for each and every action. Since I usually pay the bills, I’ll take the task of transferring the funds into savings. My spouse will handle bookings: airfare, accommodations, meal reservations, sightseeing tours and the like. 

Realistic: Be sure the goal can be accomplished. If our capacity to save is only $100/month, we clearly will not be able to accomplish the goal in a short period of time. If I’m afraid to fly and want to travel by boat, two weeks isn’t feasible. Choosing an unrealistic goal is setting you up to fail from the beginning. The goal must be achievable. 

Time-bound: Finally, the “When?” This applies not only to the goal itself but to the actions necessary to complete the goal. We’ve already stated that we would like to take a two-week trip. Let’s expand it to say we want to take the trip in two years. We’ll start saving today and begin booking the trip six months out. 

Now, when we put it all together, we have our plan. We will take a two-week vacation to France in two years at a cost of $10,000. I will transfer $500 each month into a dedicated savings account to fund it, and my spouse will begin booking the trip in 18 months. If our cost estimate is correct, our goal will be funded in 20 months. That’s four months to spare! If our savings capability is cut short one month because we had to replace the dishwasher, our goal plan isn’t adversely affected. We could also use those four months to save up a bit of extra spending money for that really nice bottle of French wine.

Cabernet Sauvignon, anyone? 

À la vôtre!


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