1 Products and services may be offered by Royal Bank of Canada or by a separate corporate entity affiliated with Royal Bank of Canada, including but not limited to Royal Mutual Funds Inc., RBC Direct Investing Inc. (Member–Canadian Investor Protection Fund), RBC InvestEase Inc., RBC Global Asset Management Inc., Royal Trust Company or The Royal Trust Corporation of Canada
It’s that optimistic, forward-looking time of year. With your eye on the months ahead, you’ll likely find yourself in planning mode. As you envision your 2023, money-related goals will likely take centre stage in much of that planning.
You may have heard of the acronym SMART or even used it when setting goals. It stands for Specific, Measurable, Attainable, Realistic and Timely. But why stop there? We’ve got some additional tips to help you look forward with confidence and set goals that you’ll stick to.
Make it meaningful
Connecting your goal to a “why” is a powerful motivator. Why do you want to save for a house, pay down debt, or contribute more to your RRSP (registered retirement savings plan) or RESP registered education savings plan)? Will a bigger house allow you to host family gatherings? Are you making biweekly contributions to save for a trip to Europe? Perhaps you’re picturing your child’s university convocation as they start their adulthood unburdened by student debt? Whatever your “why” may be, picturing it clearly can help bring your goals to life.
Viewing your goals through a lens of positivity helps with motivation, too. After all, taking on something new and challenging can cause anxiety and fear. Instead, try flipping that narrative in your head by visualizing the payoffs: When you achieve this goal, what will you feel? What will you do? Who else will benefit? Optimistic self-motivation can help you get you where you want to go.
Break it down
Big goals can be overwhelming. If you break it down into smaller steps, your goal becomes less of a faraway destination and more of a map to get you there. “I’m going to save an extra $7,000 this year” might be an excellent goal, but it’s daunting without achievable steps to get there. Instead, think monthly ($583), weekly ($135) or even daily ($19), and make a list of concrete ways to save that amount. You may even do better than you planned. Some research has found that by reframing a big goal by breaking it down into smaller chunks, people may actually end up exceeding their initial target.
It can be helpful to break up your goals into chunks of time, too. Often, it takes a while to gain momentum. Instead of fixating on reaching a goal within a year, you could try tracking your progress every three months. Want to save a certain amount for a trip, for example? Checking in on how much you’ve saved each quarter makes it easier to pinpoint any shortfalls and rejig your budgeting accordingly. Plus, seeing progress (even if it’s small!) can help keep you motivated.
Research has shown that you are two to three times more likely to stick to your goals if you know the when, where and how, notes James Clear, author of the bestselling book Atomic Goals. What does this look like for financial goals? How about: “I will review my portfolio at 8 p.m. on Wednesdays in my home office” or “I will route 10% of my paycheque to my TFSA account every second Friday at 9 a.m.” (Yes, that specific!)
Know yourself! The more self-awareness you show (that is, paying attention to your own thoughts, feelings and behaviours), the more likely you may be able to predict and identify goal-related obstacles.
The next step, of course, is to make a plan (a specific one – see above!) to deal with those obstacles, whether it’s directing funds to a rainy-day account, putting your credit card away after hitting a certain limit each month or automating your savings with a bi-weekly pre-authorized savings plan.
Document and share
Sometimes, telling people about a goal and making it public can help a resolution stick. Or, mapping out steps in writing to achieve a goal can be helpful.
Consider sharing your goals with friends to create accountability. You could apply these approaches to your financial goals by posting something short and snappy on your social media on a monthly basis if that’s your thing, asking a friend if you can do a regular check-in with them, or writing down your main steps to achieve your goal and using that list as your phone lock screen or sticking it to your bathroom mirror.
Give yourself some leeway
Planning to accomplish something by a set date is important…just be sure to add about 25 per cent more time to your calculations. Humans tend to underestimate the time required to get something done – and it can feel deflating to miss a deadline. But this doesn’t always mean the goal itself is unattainable. Sometimes priorities shift, so it’s best to account for this in our planning.
Evaluate and adapt
Keeping track of progress along the way may also help. After all, who doesn’t find it motivating to cross tasks of a to-do list? It can be the same for reaching bigger goals – seeing incremental progress can be hugely motivating to keep us on track.
As for adapting: things change that can affect your spending plans. You may get a pay bump after landing a new job. Perhaps you’ve relocated to a smaller city that’s less expensive. Maybe you had an unexpected expense pop up. As you set your financial goals, it’s important to schedule dedicated time (see “Get specific” above!) to review where you stand and adapt your plan as needed. Remember, it’s not about judging your progress, but about checking in and making any necessary adjustments to stay on track. Goals don’t have to be forever; they can change along the way.
Kids love getting a gold star. Well, it turns out that adults do as well! Positive reinforcement and celebrating reaching a goal can be a fun way to stay motivated. Look for ways to achieve small, frequent rewards along the way. You may also consider a “goal buddy” who comes up with your treat, whether it’s a specialty coffee, a congratulatory text or a night out. It doesn’t need to be big or dramatic – a small gesture or act that recognizes that you’re making progress can do the trick.
Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.