So many of us get charged up and rattle off an impressive list of goals but then struggle to follow through.
The disconnect between creating and accomplishing is where life change gets stuck. Months pass and we realize our lives are no different.
Where did progress stop (or never begin)?
Often, it's when life's curveballs throw us off our game. Even though we know the surprises will come, we're not prepared when they show up.
I thought about this recently on a Saturday morning, when my mind drifted to how enjoyable it would be to extend our screened porch. Wait, did this just become a goal? What about the 10 year anniversary trip we want to take next year? We also know one of our cars will need replacing in a few years. If we do all three of those things, will we be able to hit our charitable and retirement savings targets as well?
That’s just it. Financial goal planning is a fluid process. You have to place a value on how important that thing on your mind right now is to the list of other priorities you've thought about on other Saturday mornings.
Without prioritization of goals, we allow our impulses to rule our decision-making. This thought process ignores your plan, pushing the things that aren't as much "fun" to the bottom of your list.
Having an effective monitoring process increases your odds that follow through will happen.
Many of us don't keep a running list of things we want to accomplish. This is why when asked about our goals, we freeze and find it hard to get specific other than "to assure we are maximizing our investment returns."
Knowing why you want to get the best investment return helps keep the focus in the right direction. It also helps identify quantifiable steps that will help you get there.
Goal setting begins with recording. So often, I will be talking with someone that triggers an idea I want to pursue. If I don't get it down quickly, the idea is forgotten.
One of the most practical digital tools for this is Evernote. This helps create a central location of all the ideas that are up next on the to do list. From small goals to large goals.
Having a list, helps compare the newest goal to all the other goals you have in the queue. For example, is the next home project more important than maxing your 401k this year? Depends on the person and what your long-term plan is. If retiring early is important to you, then 401k savings matters more now than a kitchen remodel.
We also know our desires can change quickly, which is why prioritizing regularly is vital.
This is why we encourage setting a few different lists.
Some people like to add a lifetime category which helps shape more vision type of actions. Are you doing the small (and sometimes mundane) things today that get you closer to the lifetime goals?
Assigning time-frames and dollar amounts helps you measure success.
Once you create the ideas of where you want to go, we discuss the best way to implement goals. Even though we all are incentivized differently, a process keeps us moving forward.
Some things are easy to implement and can be done very quickly (setting up Roth IRA contributions for example). But not every goal can be tackled quickly.
If your main goal is lowering spending, then it’s more of a gradual process that takes tracking and regular review. While a future large purchase requires diligence in hitting saving targets.
Consequently, we set up our systems so the top goals for each client are displayed each time we interact with them.
Some examples include next car purchases, home projects, inheritances, or retiring early.
But setting the goals is not enough. It requires consistent accountability partners. This is why we have automated follow ups along with scheduled phone calls to follow up. Checking in after 2 weeks, 2 months, 6 months and a year keeps the focus front and center.
Goals that are not measurable tend to fizzle out.
So after recording and monitoring, if a goal was too vague, it's time for an adjustment.
Personally, I like to revisit my goals every 90 days, which allows for any adjustments as changes arise. At a minimum, reviewing your objectives at least annually will allow you to refocus any goals that are growing stale.
The end of a year presents a great opportunity to look back and see where you stand. Seeing progress motivates you to continue progress.
Personally, this process starts during the year. I keep a document in Evernote, that is called “Key Accomplishments.” During my quarterly review, I take a moment to record all the things I can think of that were steps forward.
This list includes it all (small and big accomplishments). From wakeboarding for the first time to reading a book I've wanted to read. You'll be surprised how fulfilling it is to look back after a year and see all you've done.
For next year, I plan to set a few stretch goals (from Steve Sanduski's podcast "Between Now and Success"). Goals that I know I won't meet but will motivate me to try. I'm betting I will be surprised by the progress.
So what goals will you focus on this year?
As we've done in years past, we compiled our view of the top 10 economic stories from 2015, and what these stories may mean for 2016.
You can find show notes and more information by clicking here: https://wp.me/p6NrVS-2uI
Is paying a fee for a financial advisor worth it? According to Vanguard, the leader in do-it-yourself (DIY) investing, they believe a financial advisor can add approximately three percentage points to a client’s investment returns per year. The study (link here) found five separate ways (below) advisors add value (alpha) in working with their clients.
You can find show notes and more information by clicking here: https://wp.me/p6NrVS-20z
It's the question we hear most often: "Am I saving enough for retirement?" “How do you think we’re doing for people our age?
These are good questions. People want to know how they measure up.
They hope to hear, they are doing better than most. In their minds, this means things are moving in the right direction. But “keeping up with the Joneses” has never been a bankable strategy. So we need to dig deeper to determine what the question is really about.
What many people are really asking is whether it would be possible for them to retire early based on their current savings. But for a young couple just having kids, the same question is likely to center on saving for college or moving into a bigger house.
People ultimately want to know if they will have enough money to do the things they still hope to do.
To begin answering this question for yourself, you first need to know the type of life you want to live. You must understand how much you are spending versus how much you are earning. But determining your spending needs is a tough nut to crack.
That’s because spending decisions are heavily influenced by quality-of-life considerations. Some people hire house cleaners and lawn services, while others prefer doing it themselves. Eating nice meals out frequently may be the spice of life for you, but others enjoy cooking at home.
Decisions on the bigger-ticket items have the greatest impact. A large house will require a larger down payment, meaning less liquid savings. Some people aspire to drive nicer cars for short periods, while others want to drive cars until the wheels fall off. Then there’s that little decision about having kids, which will have more than a slight impact on your financial trajectory.
Acknowledging the things you consider important to your quality of life can give you a great blueprint for the amount it will take to sustain that life.
While some who ask “Am I saving enough?” are seeking validation, others are worried that they haven’t saved enough.
Recent research finds that 68% of people believe they’ve saved too little — but only 3% are actually following through by saving more. This isn’t surprising. It’s the same disconnect you find in all endeavors that require consistent action. We can all get charged up on a jolt of motivation, but when it’s time to implement, we freeze.
Thoughts bubble up about the big trips we want to take this summer, or that luxury car we’ve always wanted (and deserve). We start thinking about putting more money into our 401(k), and we realize we need to limit our current spending to make it work. Then it doesn’t sound like such a good idea.
This is when what seems simple in theory (saving more) becomes hard. Making choices that change our quality of life now is more painful than we originally thought and often results in inaction.
The only way to know if you are saving enough is to piece together your financial puzzle.
Take inventory of what you’ve saved and how much you anticipate you can still save. Set up automatic transfers of money from checking to savings — but watch the credit card bills. Automating savings while accumulating credit card debt is counterproductive.
Working with a qualified advisor can make an enormous difference. Studies have shown the effect that good advice can produce. Often, this advice helps prevent you from ratcheting up your lifestyle too quickly in the first place.
Some questions have easy answers. Unfortunately, “Have I saved enough?” is not one of them. With successful financial planning, you can find your answer — and if it’s no, you can devise a way to get to yes.
You can find show notes and more information by clicking here: https://wp.me/p6NrVS-2qu