Start the year SMART: How to set sustainable financial goals in 2022

 

A new year brings new ambitions, new milestones and, hopefully, a new bank balance. Do you want to set financial goals with a lasting impact? This tried-and-tested SMART technique can help you set the right goals for your future.

How many times have you heard the words, "I just don't have enough money left at the end of the month to save", or even said them yourself? For many of us, saving is something we'll do one day when we're in a better financial position to do so.

But not this year. If your 2022 goal is to save more, spend less and have more money in the bank, then keep reading.

Saving is a mindset

Financial health isn't about how much money you earn, but what you do with the money you have. Your goals are the things you need to do with the money you have available. You might urgently need money to fix a car or replace a tyre. Or you need healthcare treatment unexpectedly, like an operation, and there is an amount you need to pay upfront to the hospital. Short-term goals like these mean you want immediate access to money in an emergency situation.

A long-term goal is, for example, being able to live comfortably in retirement. This is where many of us underestimate the time we have available to save to reach that goal, and what leads us to postpone. A goal that is far off, such as retirement, can almost seem unrealistic, especially when you're young. Depending on your age or life stage, you can adapt the way you think about saving by setting smart goals and staying focused on them.

How to set SMART financial goals

Setting financial goals is the first active step you need to take to becoming financially secure. In fact, it isn't even negotiable. But, to stay focused on your goals, it is important that you make them realistic and revisit them regularly. SMART, a technique you can use to set any kind of goal, can help make your financial goals realistic and achievable.

SMART goals are:

S Specific Make your goal as clear and focused as possible.
M Measurable Decide how you will measure and track your goal.
A Achievable Make sure you can achieve your goal within a reasonable timeframe.
R Relevant Your goal must fit in with your bigger life picture - your values and long-term plans.
T Time-bound Set a date by when you want to achieve your goal that's realistic and ambitious.

An example of a SMART financial goal could be paying off your debt, for example:

"I have R150 000 in student debt. I will pay off this debt and get it down to R0 by February 2024."

To make it possible for you to achieve this medium-term goal of paying off R150 000 in 24 months, it is important that you set yourself milestones that are realistic for the short term.

Think of practical things you can do to pay off your debt, for example:

  • Decide how much money you need to pay every month to pay off R150 000 in 24 months.
  • Set a monthly debit order to your student loan account to help you stick to your target.
  • Find ways to save towards your goal, for example:
    • Cutting down on money spent eating out at restaurants by going out once a week only
    • Putting away 80% of your thirteenth check for the next two years
    • Working from home to save on travelling costs
    • Taking on freelance work for an extra income

If you use this technique, make adjustments where necessary, and keep your eye on your long-term goals, you will achieve your financial goals. Many people do this with great success.

This article is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser.

Take control of your money   with the Vitality Money Financial Analyser

The Vitality Money Financial Analyser gives you the insights to manage your money well and get the rewards you deserve. It helps you set spend alerts, shows you when you're overspending and helps you understand your spending trends. Use it to improve your finances and get rewarded for taking steps to manage your money well.

Take control of your money   with the Vitality Money Financial Analyser

The Vitality Money Financial Analyser gives you the insights to manage your money well and get the rewards you deserve. It helps you set spend alerts, shows you when you're overspending and helps you understand your spending trends. Use it to improve your finances and get rewarded for taking steps to manage your money well.

Related articles

Five behaviours that can change your financial future forever

As with health and driving behaviours that place us at risk, there are five behaviours that influence our financial health. The good news? You can always take steps towards a better financial future. Find out how.

Five tips to increase your Vitality Money status and rewards

Vitality Money gives you the knowledge and tools you need to manage your money well. Use these five tips to stay on track to reach every target, improve your Vitality Money status and unlock your shared-value rewards.

How a budget can help you reach your financial goals

What are your financial goals for the new year? Whether you want to grow your bank balance, save for retirement or pay off your debt, budgeting is one of the most effective ways to manage your money and achieve your goals.

Log in

Please click here to login into Discovery Digital Id

Please click here to login into Discovery Digital Id