The SMART approach to reaching financial freedom


Adriaan Pask, Chief Investment Officer, PSG Wealth

Financial freedom is typically not a short-term goal. To get there, you need commitment, dedication and a clear vision. It might seem simple, but in truth, it can be incredibly daunting – especially when volatile market conditions make headlines. So, how do you ensure your financial vision becomes a reality?

The meaning of financial freedom is different for everyone. You might see it as lounging on your private yacht or simply being able to manage unforeseen expenses comfortably, depending on your perspective. Vicki Robin, author of Your money or your life explains that “money is what we choose to trade our life energy for” and being financially free allows you to decide how you spend that energy. A SMART approach can help you in becoming financially free.


SMART is an acronym that is widely used in goal setting. It stands for: specific, measurable, achievable, relevant and timely. Although this plan was initially developed for businesses, it can be applied successfully to your personal goals, especially financial ones. When you have a solid plan guiding your actions, you are more likely to achieve your vision.

This is how the SMART approach can help you reach financial freedom:

Specific – Be clear about your goals and what’s needed to achieve them.

Measurable – Find evidence that your investments are on track.

Achievable – Be realistic about your milestones.

Relevant – Ensure your investment plan is structured properly.

Timely– Don’t make rash decisions; invest from a young age.

Looking at these steps more closely can make picturing financial freedom a little clearer. 

Specific – avoid ambiguity when drawing up your financial goals

Be specific and intentional when calculating the amount your vision equates to. For instance, the rule of thumb is to have three months’ salary saved up for emergencies, so that might be a goal you’d like to work towards. Attaching a concrete reason why you want to realise your financial vision will make it easier to stay focused towards accomplishing any goal you set. Moreover, when you have a bigger vision, it’s much easier to avoid the short-term thinking that is often destructive to wealth creation.

Measurable – find the balance in reviewing your progress

Although putting money away every month may make you less likely to move it around or use it, taking regular stock of how your investments are doing is an important part of staying on track. You might calculate your ROI, the compound growth rate or assess your investment compared to its benchmark over time. Working with an adviser helps to assess if you’re keeping pace with your plan.

Achievable – being realistic will help

Don’t decide that you want R20 million saved up by a certain age if you live pay cheque to pay cheque. Assess your everyday life to see what you have available and where you can make changes. Your financial freedom vision is entirely personal, so choose a goal that challenges you, but that won’t break you financially.

Relevant – how you attain your goal matters

Before you decide on an investment plan and how to move forward, do the necessary research. Never invest blindly or based on gut feeling – you might get lucky, but often you’ll lose. Don’t try to predict the market. Any expert that’s worth their salt will tell you it’s impossible and the chances of being wrong are overwhelmingly high. With day-to-day market moves driven by chance and sentiment, trying to predict or explain these short-term moves is like explaining the taste of water. The science behind investment decisions takes years to hone.

Timely – you probably won’t become rich overnight

The chances of winning the lotto are about one in 20 358 520, and you need to realise that reaching your financial goals could take some time. It can be terrifying to leave your money in an investment when the markets perform poorly, but recessions and pullbacks are normal occurrences, and they too will pass. Keep in mind that if you can avoid being swayed by emotion and stick to your long-term plan, you may be handsomely rewarded.

A proper investment plan equates the level of risk you are willing to take with the time you have available to invest and the returns you’re after. Such a plan should be constructed in a way that ensures you have a built-in buffer against severe market downturns, and it should be diversified across a spectrum of investment options.

A plan specific to your needs

Sticking to- and achieving your financial vision – becomes much easier when there is someone at your side. A financial adviser can help guide you and will spend time and energy to investigate which products and avenues suit your needs better, or they can stand by you in times of market volatility, assisting you in building a plan to reach your vision of financial freedom.