Is Your Financial Goal Only a Wish?
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowAre you a goal setter? If not, it’s time to start daydreaming. What do you want your life to look like in five years…or in 25 years? A Harvard Business study found a direct correlation between goal setting and success. It’s time to put pen to paper and figure out what your future holds.
Early retirement. Vacation Homes. Transitioning from full time work to part time. These things don’t just happen. Achieving goals isn’t rocket science, but it is related to neuroscience!
Getting Started
Having financial goals is essential to money management because it aligns your dollars with a purpose. Gone are the days of living paycheck to paycheck. You work hard for your money and it’s time your money works for you.
You are probably familiar with the concept of SMART goals (specific, measurable, attainable, relevant, and time-based). Although this principle was crafted in the early 1980s, it remains helpful today.
However, it is often difficult to understand whether a financial goal is realistic. This is where a financial planner can add value. For example, many young parents would like to pay for their children’s college experience. Few understand the current cost, let alone the projected cost of higher education. There’s a reason why federal student debt exceeds $1.29 trillion! A financial advisor can determine what’s attainable, given your financial situation.
A good goal is within reach but causes you to stretch in some capacity. It shouldn’t require you to pinch pennies, but it will involve stepping out of your comfort zone and shuffling your cash flow to some degree.
Monitoring Goals
As French writer and poet Antoine de Saint-Exupery once said, “A goal without a plan is just a wish.” The best way to achieve a goal is to define the steps needed to complete the goal.
Let’s say you want to retire by the age of 60. Common sense would tell you that contributing just enough to get your employer’s 401(k) match each year won’t be enough to meet your goal. Again, a good financial planner can determine what additional savings are required to get you to the finish line on time. Once you’ve zeroed in on an amount, let technology do the heavy lifting. Automate your savings so that you know it gets done.
In college, I worked as a cashier at a grocery store, and I can’t tell you how many customers got to the register, only to realize they forgot their grocery bags in the car. I like to compare goals to the reusable grocery bags laying in the trunk–out of sight, out of mind! If you’re one to fall off the wagon easily, it might help to set calendar reminders every six or twelve months to track progress.
Is your system working? If not, what got in the way and how can you avoid that hurdle in the future? I work with a highly motivated young professional that incorporated their retirement goal into their 401(k) password. How’s that for top of mind?
If you’re like me, at times I need to drum up some motivation to re-energize progress toward a goal. For example, every time I train for a half marathon, I get sick of running midway through the training program. Investing in new running shoes, a fancy watch, or other gear can be my motivation to get to the finish line.
Part of a financial planner’s job is to monitor client progress and hold them accountable to their goals. If you struggle to achieve financial goals by yourself, consider hiring a financial planner to keep you in check.
Back to the Drawing Board
Goals and the steps needed to achieve them change over time. There are many factors that can impact the achievement of your financial goals either positively or negatively, such as a job loss, promotion, or change; an inheritance; a disabling event; an emergency expense; a family gift; or the over- and under-performance of the stock market.
Goal-setting is a never-ending process. As your finances change, so will your goals. Time is of the essence. Defining goals early on can provide flexibility to adapt to life’s changes, rather than accept the reality of a situation.
Conclusion
Don’t approach your finances with a laissez-faire attitude. Start defining your goals. Hopes and dreams can become a reality with proper planning and execution!
Kate Arndt, CFP, is a Financial Planner with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.bedelfinancial.com or email Kate at karndt@bedelfinancial.com.