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Be S.M.A.R.T.

As the New Year is quickly approaching, many of us are coming up with our resolutions. The majority of the world is agonizing over resolutions like “losing weight” or “stopping drinking”. While goals like this are noble enough, the majority of the majority are also unlikely to follow through on them. This is because they are not SMART goals. SMART is an acronym for Specific, Measureable, Achievable, Realistic, and Time-specific. All goals should be developed within this construct. Just saying you will lose weight is not specific, and saying you will stop drinking is likely not achievable (for most anyways). If you want to have a lose weight goal it might look like this, “I will lose 5 lbs per month in 2022 for a total of 60 lbs by walking or biking to work, joining and attending a gym a minimum 3 days per week for 1-2 hrs, riding a stationary bike any time I watch TV, and by eliminating all sugar, junk food, and processed food from my diet.” This goal is very specific. It explains the what, where, how, and when. The goals of weight loss and objectives of work travel, gym attendance, stationary activities, and dietary guidelines are very measurable. This goal and the objectives are also very achievable. It is not so lofty that you will become discouraged. For instance a goal that says you will lose all 60 lbs in one month has the potential to de-incentivize you and make you less likely to continue with the goal or actions you developed around that goal. You want to have the reward of achieving your monthly goal, to keep you engaged.

It is a well known fact that people who set realistic goals and review their progress frequently are more like to achieve them. Good goals are habit-forming. Good habits are developed through doing the right things over and over, and getting positive results from those actions. Those positive results form the building blocks of good habits. The behaviours involved in setting SMART goals to achieving a healthy weight and physique and those involved in building a resilient portfolio and wealth are not any different. You are trying to form good habits, based on proven techniques, and maintain the positive outcomes from those habits to reinforce them.

I’m reverting back to maintaining a healthy weight for a bit as an example. Your body is not that complicated. Garbage in equals garbage out. Contrary to all the quick-fix solutions provided by the supplement and health industry, the only sustainable way to maintain a healthy body and weight is to develop good eating habits, plus stay moderately active. Jamming bags of junk food into your body while chasing them with a litre of pop every day, and sitting on a computer with all your spare time playing Warcraft, will likely not have good outcome over time health-wise. Achieving a healthy body is 80% diet and 20% exercise. You need to focus on healthy eating first, then remain active daily. There is lots of good literature on eating better. But if you are eating processed food, fast food, or junk food daily, this is good place to start to eliminate. Alcohol is also not conducive to weight management or overall health, and keeping your drinking in check is also important. Personally, I adopted a whole food, plant-based, no-oil diet a couple years ago. Though it is not for everyone, my wife and I felt this was our best dietary course leading into our senior years. It is founded in the principles outlined in the book “The China Study”, and explained in the movement and documentary “Forks over Knives”, if you are interested. Good results enforce good habits, and I have had both since we changed how we eat. Food is the new medicine. Now I feel I'm getting a little preachy, which was not my goal, but I wanted to pick a goal that is common and relatable to most people to compare to developing successful financial goals.

Ok, back to financial goals. Building and maintaining wealth, similar to achieving and maintaining a healthy physique, is simply a lot of small things done right. And the rewards come over time e.g. no quick fix. Pick one or two and get started. You will find they too become habit-forming as you achieve them. All the good financial habits are already out there, documented, and time-tested, and you do not need to look for quick fixes to your goals. Just pick up a book and start reading, or go to one of the many established financial BLOGS and start reviewing articles. There are MANY resources. There are no shortcuts to wealth like meme stocks or casinos. At least there are none that do not come with a lot of risk or very low probabilities. Even if you do get lucky, you are likely going to lose it because the reward reinforces a very risky or poor behaviour. Trust me, I've been there. Pick one or two good financial goals and get started. You will find they become habit-forming if they are good goals. Buying hundreds (or thousands) of dollars in junk food, fat burner supplements, or video games will serve a better objective by going straight into your TFSA or RRSP every year. Figure out what isn’t working for your goals today and get rid of it. In all likelihood it will save you money and make you healthier, both mentally and physically. Use those expense reductions to fortify your savings. For example, by quitting smoking you may realize $3-4k or more in savings per year, and it consequently improves your health which will reduce future medical bills. Some proven financial goals include:

  1. Eliminate and avoid debt, saving towards all future purchases.

  2. Find a way to slash your household expenses by 15-30%.

  3. Build a reserve fund of 4-6 months of salary.

  4. Save towards a mortgage downpayment, and qualify to buy your own home.

  5. Save 15-30% of your income into a TFSA, RRSP, then savings account.

  6. Learn to DIY invest, using index-tracking, exchange-traded, funds (ETFs).

  7. Improve your skills or knowledge at work (value). This usually results in a raise.

  8. Use income gains to pay mortgage down faster, or top up registered savings.

These are pretty high level goals, and you will need to make them SMART by assigning some achievable objectives and timelines towards them. But you get the point? You usually don’t achieve what you don’t commit to smartly and measure, so don’t forget these important aspects of goal setting. Find a way to measure your progress and review it monthly. Reflect on why you did or didn’t achieve your goals. If you are able to get back on track you likely have good objectives that were not met, and if you can’t get back on track you either have unrealistic objectives or the wrong ones? After a while you get good at it, and it becomes a good habit you don’t even need to think about any more. I still set 5 goals a year, and look back at them regularly to tweak them. I don’t spend a ton of time setting financial or health goals any more in retirement, or at least they look much different. Much of these have become habits for us now, how we maintain our mental, physical, and financial health. Though I have to admit, quitting or reducing the wine and beer intake remains my greatest health challenge. Financial goals for us in our retirement entails things like reviewing our portfolio against inflationary pressures, and gifting and travel plans (hopefully). Along with the occasional wedding, replacing an appliance, and other lifetime events that come up.

So, set those SMART goals for 2022 and have a Happy New Year!

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My experience has been that it is far easier setting SMART goals when they relate to something that really motivates you. Two examples for me are completing an Ironman triathlon and retiring as soon as I could. When it came to Ironman, once I decided to take the leap, it became close to an obsession. Physical and mental training took place over a two year period building up to the point I was able to go the distance. In retrospect, the training process was more satisfying than the event. I registered for a second Ironman 2 years later, but although I knew the process, I lacked the motivation to repeat the effort and withdrew.

Early retirement motivated me over my…

Dec 31, 2021
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Very, very true. Good goals, like the ones you describe, are basically strongly desired outcomes. They are born out of a enthusium to try or do something different. In our life these dates pop up at work (annual work goals) and in life (New Years or a Doctor’s visit) that make us reflect deeply. Truth be known, we should not need any specific date to trigger us to create a desired outcome. When (if) we come to a realization, for whatever reason, to make a positive change, we should just get going. The process itself is an evolution with many dynamics and forces that may work against us accomplishing our goal. The objectives can change. The outcome (or goal), ma…

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