I enjoy living in homes in two states, Nebraska and Arizona.
My home state of Nebraska (“There is No Place Like Nebraska”) is especially enjoyable because my family is here, as are my cherished clients and my trusted associates. Spring and fall are pretty terrific too.
August, not so much—think hot/hot/humid.
Scottsdale, Arizona, is pretty spectacular much of the year with golf, sunshine, and plenty of amusements. The weather is awesome most of the year… except August.
So here I am, taking it as easy as possible, avoiding everything but a dip in a pool or wrapping my hand a glass of something very cold.
Perhaps you’re in the same situation. The summer vacation is planned or over and done with, you’ve had your fill of golf, and it’s soon time to get back to school, get back to work, and back to normal. But the Dog Days are here for a while longer.
Maybe this is a good time to consider your future, to think about what you want in the year(s) ahead, and write down a goal or two that is measurable and time-dimensioned. Goals without measurement and a deadline are just wishful thinking.
In The Eight Points of Financial Confidence the first of the steps is to plan, to be intentional about what is really important to you. Consider picking up a copy of this short book, but for now here’s an excerpt on goal setting and planning your future.
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Life Goals Supported by Money
(an excerpt from The Eight Points of Financial Confidence)
Life Goals. What do you want to have happen in your life? If we were to sit down together in three years, five years, 10 years… and look back to today, what had to have happened in your life for you to achieve the things that are really the most important to you?
It’s your life. What do you want to achieve and how can money support your life goals and desired lifestyle? It’s all about you. The reason we refer to our profession as “personal finance” is because it’s about your finances and, well, it’s personal.
“Do I really need to set goals?” you might ask. “Why not just do the best that I can and accept the outcome?”
Experience has taught me that a few people can achieve some level of success by accident, but not very many. Most of us must be intentional about making progress, both personally and financially. My time-tested advice to you is that you can pursue your goals on purpose. First you must identify what’s really important to you.
Your goals must be your goals, based on your values and wishes—not someone else’s thinking or society’s expectations. To be valuable and attainable, there should be an emotional element (or a specific, meaningful reason for the goal) behind your desire to reach your goal or goals.
Vague goals like “I just want to invest and make money” or “I want to beat the market” foster haphazard strategies and little or no incentive to take a disciplined, preplanned, specific plan of action.
Additionally, goals should be measurable, have a defined outcome or result, and have a time dimension to be effective. Goals that don’t have a number or a due date are really just a vague wish.
Consider how these goals are the same, but different:
- I am saving money so that I can pay college expenses for my child.
- I am saving money for my child’s college expenses because she will be the first in our family to attend college; I need to be able to contribute $100,000 when she enrolls in 10 years.
Which goal is backed by emotion? Which goal mentions a measureable time and dollar amount?
B certainly has the better goal; A needs only to think a bit deeper, consider his “why,” and set specific dates and times along with a specific amount. Many of the new clients we accept in our practice express unclear goals similar to A’s goals, so don’t be disturbed if you don’t have specific, measurable goals that are backed by emotion. You can get started exploring and identifying your true wishes in a couple of pages.
Before we move on, consider these goals:
- I want to retire early and not run out of money
- I want to retire at age 55 with $5 million dollars in savings so that I can volunteer my skills as a physician to provide care to people in need.
B has developed a very specific goal, a stated amount, and a time frame and backed it up with a meaningful reason, which is the way to be intentional about setting and realizing life and financial goals.
When you discover and become aware of your true life goals, and you know what actions you must take to help realize them, you have taken a huge step toward being financially confident.
Once you’ve discovered a goal or goals that are important … write them down. Thoughts and feelings are fleeting and can be quickly forgotten. Writing them down makes your goals permanent and concrete.
Financial goals also require you to associate amounts of money with each goal and a timeline for the accumulation of the money you need to be successful. Your wealth manager should be helpful every step of the way by asking questions to help you discover your goals, calculating the money to support the achievement of the goal, and helping you track your progress regularly.
You can start using your imagination now and write down your goals, if you’re ready.
Goal Identification and Ranking
You might already have some general (i.e., vague) goals in mind, but having just learned about the importance of being specific, time-dimensioned, and backed with emotion, you might have some thinking to do.
Consider the list of life events/goals on the next page [download the PDF
] and then rank the top three to five goals based on order of importance to you; then rank them in the order in which you would like to accomplish them.
Can you attach an emotional reason for the achievement of your most important goals? Can you establish time frames and specific amounts of money needed to achieve these goals?
Consider your three most important lifetime goals. Why are these important to you? How will your life change if you do NOT reach these goals?
Which of your “urgent” goals (the goals you want to accomplish first) can you live without?