A SMART House Deposit

One of the ways I can secure the financial future of my daughter with additional needs is to make sure those around her are also secure.  That means us, obviously.  But also her sister.  We all love our children equally, and so that means helping them all equally.

But that doesn’t necessarily mean buying them a house!  No.  Let’s not go too
far.

For me it means giving my eldest the confidence to know she can make her own way in this world.  Helping her have pride in her independence.  And one of the ways I can do that is to help her leave the nest.

Like Andy in this week’s podcast, Long Term Goals Built On Small Steps, I’m not sure I want her to leave at 21.  She might be ready; that doesn’t mean to say I am.  Maybe the thing stopping her will be the huge, huge deposit needed to buy or even move out to rent.  One way or another leaving home is expensive.

So I want her to set a goal to make it happen.  To move out to rent also needs financial planning, otherwise lack of it may mean she might move back within a month. (Maybe then my reticence for her to not leave by 21 would have changed, and I might have change the locks too.)  Thus, I’m encouraging her to think along the SMART line.

SMART goals have been around for years.  But as with all goals the key to a SMART goal is following the desire to reach a certain point or thing.  SMART is an acronym, and for the task of saving for a house deposit may look something like this:

     Specific
The S in SMART stands for specific.  That means a specific goal.  Saving for a house deposit is not specific.  Saving 20,000 is.  20,000 is quantifiable and measurable; therefore, it can be a part of a SMART goal.  We have a number or thing that we can achieve, whereas save for deposit is a bit like a piece of string – how long did you say?

Perhaps more specific would be: save 20,000 for a 2 bed apartment on the south side of the city in 3 years.  This not only tells us how much we want to save, but also gives us an indication of the type of property we want, where we want it located, and when we want it.

     Measurable
Our specific goal above is measurable because there is a specific number or thing we need to get to.  Being measurable is the really good thing about a SMART goal.  Measurable means it can be broken down into little chunks and ticked off as we do each chunk.

In our specific goal of 20,000 we could have a wall chart with 40 boxes of 500 climbing up to our target (40 x 500 = 20,000).  As we save 500 we could take out our pen, mar another box, then we can see clearly how far we’ve come and how much more we have to do.

     Achievable
Achievable is the first in my opinion of the more difficult to define parts inside a SMART goal.  Achievable is to help us decide whether something is realistically possible.  For example, my daughter could have a specific goal of owning a Penthouse apartment in central London.  She could work out the deposit needed was 1 million, and have 3 years to save this.  But the fact of the matter is she couldn’t save this.  It’s beyond me, let alone her.

However, a small apartment somewhere not quite in the centre of London is possible.  She could set a specific goal for how much deposit she would need, and break it down in chunks.  It would be something she could theoretically do.

     Realistic
Realistic is the other hard to define part to check my SMART goal.  Above we’ve established that our goal is theoretically achievable, but we still need to ask is it realistic?  For example, my daughter may have a more modest goal of saving 20,000 in 3 years, but when we think that she wants to learn to drive and get a car in this time also, her goal doesn’t sound so realistic.  Either she has to decide to save less and buy a cheaper apartment or save the same amount but over a longer time.

In effect the Achievable and Realistic are the checkers for the SMART goal.  They tell us whether our specific goal is a pipe dream or not.

    Time
Time is quite simply the time frame.  We’ve said in our specific goal that we want to save this money in three years, so we look on the calendar and write down the actual date in three years.  Then we have a specific time we are going to achieve our goal.

In summary, SMART goals are great because they are specific in the goal we want, measurable in chunks, and time-bound.  They also have checkers of whether they are theoretically achievable and realistically possible in our life.

Getting my daughter to leave home early isn’t the point here.  The point is to equip her with some financial skills that will help her to set targets so that she may get the things she wants in life.  Money and financial literacy is not taught well in schools, and so I feel it’s my responsibility to point her in the right direction where I can (and hope she listens).

Maybe the first time she uses a SMART goal will be to enable her to leave home.  To move into rental accommodation these days usually needs around 10 weeks worth of rent.  4-6 weeks deposit, plus the first month in advance.  Then there’s usually agency credit referencing fees on top of that.

In setting out this example of a SMART goal around my eldest daughter I don’t mean to discount my youngest one day buying her own place.  Maybe she will also use a SMART goal for this.  We all hope that our children with additional needs will learn the rules around money, and not be vulnerable to crooks and scams.  I would prefer her to have the security of owning in her own name.  Indeed, that’s always  my ambition for her.  I want both my children to be free of me.