The SMART path to happiness: Making financial goals happen

Posted by Julian Nowland

Remember all those New Year’s resolutions you made back in January? Well it’s now March, which means either they’ve taken effect or you’ve returned to your 2015 habits.

Mind you, that’s assuming it takes about three weeks to permanently change a habit. That theory came from Maxwell Maltz’s book Psycho-Cybernetics in the 1960s, which has been the foundation of self-help gurus such as Tony Robbins ever since. However, research conducted by University College London in 2009 suggests it takes about 66 days.

I believe a lot of New Year’s resolutions fail because people focus on what needs to be done now, rather than how great things will be later on.

Think of a goal you’d like to achieve. Now imagine you’ve just completed that goal. How you feel? What satisfaction did it bring? How much better is your life now?

This is what makes a goal Relevant—one of the five criteria you need for S.M.A.R.T goal setting.

What is S.M.A.R.T goal setting?

It’s all to do with the S.M.A.R.T goals system, which is a way of defining goals using five simple criteria:

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Time-bound

Here’s a comparison between setting a goal poorly and using the S.M.A.R.T system.

Poor goal

S.M.A.R.T goal

Overall Goal

I want to get fit

Specific

I’ll do more exercise.

I’ll walk, as it’s the simplest exercise to implement.

Measurable

Nope

20 minutes a day.

Attainable

Uh-uh.

Yes, I’ve blocked out time in my diary.

Relevant (or meaningful)

Nope.

Being fitter will let me play with the kids in the park instead of running out of breath.

Time-bound

Not even close.

I’ll do it for a month and get a health check-up.

And it’s just as relevant for financial planning as it is for getting fit. Unfortunately, not many financial planners take clients down this path. Rather than focusing on people’s goals they tend to concentrate on superannuation, investment portfolios and insurance. 

To me, that’s just mechanics and administration. Yes, they’re important. But it’s not as if they need to be re-invented every year. Goals, on the other hand, should be checked regularly. And probably a lot more often than every New Year’s Eve.

Happiness is important, too

These days I ask my clients a few more questions when I first meet them:

  • “Are you happy at the moment?”
  • “Why/why not?”
  • “What are the contributing factors?”

And here’s what I’ve found:

  • Positive responses usually revolve around family, relationships, security and personal life.
  • Negative responses often deal with work pressures and stress, (lack of) security, health issues and financial issues.

I’ve never heard a client tell me they’re happy because of how much they earn or what they’ve just bought.

Which begs the question: Why aren’t the Relevant parts of our S.M.A.R.T goals set around the people, relationships, hobbies and events that provide the most happiness? What relevant personal, work and financial goals can we put there to make us happier and more likely to achieve our goals?

As a financial adviser, my primary role is to help manage my clients’ finances. But using S.M.A.R.T goals to link financial success with personal success (and happiness) makes the path not only clearer, but also more attainable. 

Financial goals can’t be isolated from personal goals. They’re linked, and each affects the other. So it’s important to visit them regularly (more often than you would an insurance or superannuation portfolio) and adjust them if necessary.

Some of my clients live and work overseas. They’re time-poor, and spend a lot of their time in airport lounges. But they’re in constant contact with their office and the team they work with. They’ve worked hard to climb the corporate ladder, and they make a lot of money in their senior roles.

Unfortunately, their family and friends are all back in Australia.

Where does the financial security of making a fortune overseas meet the personal contentment of being with family and friends back in Australia? Can they find the time to visit their family more regularly? Could they still reach their financial goals by taking a lower-paid job in Australia and making better financial plans? 

Sound financial modelling can certainly help them out. But ultimately they need to ask themselves a simple question: “Does this make me happy?”

And if it doesn’t, then they need to do something about it.

To make a time to have a chat about doing something about it yourself, get in touch and we’ll step you through the process of creating your own S.M.A.R.T goals that build on your financial success.

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