Six Tactics to Achieve Your Financial Goals

Research shows that New Year resolutions fail.  Why?  Because resolutions aren’t clearly articulated goals.  In my opinion, annual goal setting is a necessary yet arduous process.  This blog post focuses on the goal setting process, and financial goals in particular.  Hopefully, it will inspire you to create your own set of goals for 2017. 

1. Start with Aspirations and Aim High

Think of the goal setting process as a funnel.  You should start with the high level, strategic dream or aspiration and then narrow it down into a particular goal. 

Dream --> Goal --> Small Steps

If you want to pay off your mortgage, that is a great aspiration.  But it becomes a goal when you define how much debt to pay down in a particular year.  Let’s suppose your mortgage balance is $150,000.  Unless you have a sudden windfall, it is unlikely you will erase that debt within a single year.  Rather, create a plan and define the terms.  Perhaps you can set the goal to pay down $10,000 of principal by December 31, 2017.  Further decide if you want to make the extra principal payments each month, quarter, or semi-annually. 

By aim high, I mean go outside your comfort zone.  If $5,000 of debt pay down is comfortable, then $10,000 is a stretch but doable (with the proper motivation).  Saying you will pay down $30,000 in 2017 is delusional, so don’t go to that extreme either.  Leave your goal at $10,000.    

2. Appreciate the Crossover

Many people assume goals are mutually exclusive.  I don’t think this is the case at all; instead, there is a lot of interconnectedness.  If your family and personal relationships are going well, you are probably tending to your physical, financial, and emotional health.  If you cannot get motivated to achieve a weight loss goal, you may lack the perseverance to achieve a financial goal too.  To be most effective, strive for 7 to 10 goals annually across all realms of life.

My parents recently relocated from St. Louis, Missouri to Florida.  They are different people in Florida — stronger physically, mentally, and financially — and I couldn’t be happier for them.  In fact, I’m visiting them this week and they just declared they are officially debt free — mortgage, car, everything!  As their daughter and now financial advisor, I find this inspiring.  To get to this stage, it took them decades of hard work, determination, and planning.  

3. Articulate and Monitor Your Goals

Nearly everyone will agree that goals are helpful to reaching personal and professional aspirations, yet few actually write them down.  Writing your goals in black and white increases your chances of success.  Once you articulate them, don’t shove them in a drawer to collect dust.  Similar to a financial plan, you need to evaluate progress and tweak it.  

Let’s say your financial goal is to increase business income by $10,000 by December 31, 2017.  You set the goal and put it aside until November.  Your year-to-date business income is the same as the prior year.  How on earth are you supposed to raise an additional $10,000 of business income in two months?  Wouldn’t it have been more beneficial to set a goal of $5,000 additional income by June 30 and adjust the December 31st goal if you significantly missed the mark?

4. Create Goals that are Measurable and Specific

To evaluate progress, your goal must be specific and measurable.  Following the prior example, let’s say you started too general — to increase business income.  That’s not quantifiable.  Do you want to increase business income by 20% or 50%?  By what date?  If you set the goal for December 31, 2017, consider quarterly “check-ins” to see if you’re still on track.  That leads us into the next point — celebrate the victories.

5. Focus on the Wins, Not the Gap

As I’ve said before, transformation doesn’t happen overnight.  Break the goal into small steps.  If you have a total of $15,000 of credit card debt to eradicate, consider the debt snowball approach.  Pay off your smallest debt balance by January 31.  Then focus on the next smallest balance by April 30.  If you look at the big gap of $15,000, it is easy to get discouraged.  Setting up smaller incremental goals will keep you motivated throughout the debt payoff process.  

6. Look at Failure as an Opportunity

By stretching outside your comfort zone, there will inevitably come a time when you cannot reach 100% of each goal.  Rather than thinking of yourself as a failure, focus on what you DID accomplish and how you can learn from this experience.  Suppose you wanted to build an emergency fund of $12,000 by December 31 but you only got to $10,000.  Look at that!  You got to $10,000!  That’s awesome in and of itself.  Get creative on how to reach the $12,000 goal.  Perhaps you have a year-end bonus and can allocate $2,000 of it to the emergency fund.  Or boost your 2018 goal to $14,000.

Ready to set some goals for yourself?  I’m refining 2017 goals and have some new ideas for WorthyNest.  Since this company is family-centric, I’m going to practice what I preach.  Taking next week off from blogging.  See you in January!

Forever faithful,

Deb Meyer, CPA, CFP(R)