Get specific: Details determine resolution success

"I want to get in shape. I want to save more money. I want to work on my relationships." At the start of a New Year, many Canadians set resolutions. Although well intentioned, these hopes often fall flat weeks later. Experts say it's because these goals are too generic.

For instance, in December 2014, for the fifth year in a row, Canadians said paying down debt was their top financial priority in the New Year, according to a CIBC annual survey.

That's well and good, but without a specific plan to do it, the goal is nothing more than a pipe dream.make-specific-goals

"Bad planning is your biggest downfall," says Judith Cane, an Ottawa-based financial planner. "Saying you want to save money is one of the biggest things people hope for on Jan. 1, but if you say that and don't do anything to set it in motion, nothing will happen. It's just wishful thinking."

Create SMART goals
Cane helps her clients set goals using the acronym SMART: specific, measurable, attainable, realistic and timely.

Getting specific is a two-pronged approach. First, you need concrete numbers. If you want to save money, start an emergency fund or pay off debt, for example, give yourself a number: I want to save $5,000, I want a $10,000 emergency fund, I want to pay off at least 50 per cent of my debt.

Then, you need a reason why you want to achieve this goal. According to Brian Betz, a Calgary-based debt counsellor with Money Mentors, this part of the equation is just as important, but is often left out. For example,
maybe you're worried about your job situation, saving for a trip or paying off debts. All of these are solid reasons. A simple number with no personal meaning is just as bad as saying, "I want to save more."

"It gets boring after awhile because there's no end result, aside from having saved $5,000," he says. "You need to add another element to it."

Measurable and timely aspects are easier to nail down after you set your specifics. If you're hoping to save $12,000 by the end of the year, you'll know that at the six-month mark, you should have at least $6,000. Create monthly or quarterly benchmarks, and keep checking your goals to make sure you're staying on course.

The ‘M' in SMART could also stand for mutual if you're setting goals with a partner. Make sure you're both on the same page when you etch out your goals.

The answer to whether your goals are attainable and realistic lies within your budget. After crunching numbers, some goals may not be feasible without tweaking your deadline.

"Find out what you've got: what you earn and what your bills are and things you owe," says Cane. "Then you'll know how much you need to save to achieve that goal." You may need to make sacrifices in other categories in your budget, or look into making extra income, she says.

How many goals should you set?
The experts suggest setting three goals: one short-term (completed by year-end), one medium-term (completed within three to five years) and one long-term (five to 10 years).

However, keep in mind your income and constraints may determine what you can fit into your budget.

"You might not be making a lot of money, so you might have modest goals," Betz says. That's OK; creating a $1,000 emergency fund by year-end is a great goal, he says. And remember, small things -- such as saving for new shoes or your child's birthday party -- count as short-term goals, too.

You need to challenge yourself at least a little, though. "You've got to put a little bit of stress on yourself to make something happen in life," Betz says. If you're handing yourself a huge allowance for eating out, but won't make saving for a new car a tangible reality, it may be wise to rethink your budget.

Make them stick
Once you've got a specific goal tethered to a solid reason why you've set it, write both components down. Betz says those who put their goals in writing are more likely to achieve them.

Cane compares it to dieters putting inspirational photos of thinner people on their fridge or mirror. This concept works with your financial goals, too. Print out an image of your dream home or holiday destination, and stick them to your wallet, she says. Each time you whip out your credit card, you'll think twice.

See related: How to conduct a year-end postmortem on your finances
Published December 22, 2015

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