Goal (as defined through Webster’s Dictionary): “The object of a person’s ambition or effort; an aim or desired result.” Goals are easy. We find something we like, set an arbitrary goal to reach or obtain it, and then may or may not do something to further that ambition. Just like many of us who set a fitness goal at the start of the year and fall off the wagon by March, financial goals can be just as easy to give up and renew later when the time is more convenient. The difference between reaching a goal and having a “I tried once” story, is making yourself accountable.
The path to financial success begins with a vision translated into purpose and then continually acting upon it in a manner that is consistent with the original vision. The financial process is a loop with constant feedback about our progress. Creating accountability within the financial process loop is important to make sure we are progressing toward our ultimate financial vision.
Last week we spoke about Applying the “Why” and how to translate your financial vision into purpose-driven action. Part of the actions within the purpose is pursuing financial goals. Setting financial goals is easy; sticking to them can be more difficult. Financial goals are not difficult because they require a significant amount of physical effort; it’s because they require a level of fiscal discipline that we’re not yet comfortable pursuing. In the age of credit cards, plastic money, and online transactions, it’s easy to lose track of spending. Seriously, when was the last time you balanced your checkbook?
Since we’re no longer involved with our finances on a daily basis, we need to come up with a more “hands-on” way to be accountable for our finances and our financial goals. Remember that financial goals are stepping-stones to our ultimate vision. Goals are not to be used as a destination, but simply a step in the process of pursuing our financial purpose. Goals should be simple, obtainable, measurable and, most importantly, accountable. For example:
Your financial vision is to retire in Florida with a pool in the back yard and easy access to an airport so you can see your grandchildren often.
Setting a goal of: “buy a house near Orlando” is too broad, has no real path, and cannot necessarily be measured. However, “save $50 a week for a year” to be used in the purchase of a Florida home is simple, it is obtainable, it provides a way to measure its progress, and you can hold yourself accountable.
The goal is simple – “$50 a week.” You can easily define and produce the actions necessary to reach this goal. The goal is obtainable – “$50 a week for a year.” It is doable – by examining your spending, you can find ways to save $50 a week. The goal is measurable – “…for a year.” It has a define start and end – at which you should have $2,600 (52 weeks x $50). If you can measure the goal, you can hold yourself accountable for it.
Holding yourself accountable for your goals is one of the hardest parts of personal finance. This is because it makes you look inside and admit your faults or weaknesses. However, being accountable doesn’t always mean you’re going to fail. Being accountable means you are responsible for both the failures and the successes. Therefore, setting and reaching a goal can be significantly rewarding.
When you reach a goal don’t forget to reward yourself! You did a great job. For instance, should you stay on track and end up with $2,600 at the end of the year, perhaps you take $100 and treat your spouse to a nice dinner where you can dream of the Florida house and develop a greater vision for the future and recommitting to your purpose and your financial future.
When you reach a goal, don’t forget to set a new stepping-stone. Remember, goals are not end-states. They are progress points along the path of your financial vision. Once you’ve become comfortable with $50 a month for the Florida home, perhaps $75 for the next year, or another $50 goal. Remember to put a number and a time to the goal so you can measure its progress and hold yourself accountable.
A goal is not a singular event. You will have goals for savings, goals for housing, goals for education, goals for debt, for vacation, for emergency savings. One of the best ways to track your goals is to get a simple notebook and write each one on a separate page. A bit archaic I know, considering today’s technology. However, the act of physically writing your goals and tracking them in your notebook provides mental accountability and positive feelings toward progress when you can check off the weekly steps to obtaining those goals.
Remember, goals are mile markers, simply checkpoints along the path to your ultimate vision that is driving your financial purpose. Goals can be changed or modified based on your current circumstances, but your financial vision will not necessarily change. There’s more than one path to reach your financial vision and you can use goals to chart your course.
Jonathon Rowles Captain, USMC (Ret.)
Disclaimer: (have to do it) – This blog should not be considered financial, investment, legal or tax advice. Consult your licensed financial professional, tax advisor or legal counsel. This blog is for educational purposes only.