No one wants to grow up to be a goal setter. But somewhere between high school and college graduation we realize, if we want to be that marine biologist or that fire fighter we always hoped for, we’re going to have to set a goal.I feel like talking around goal setting is often over complicated or worse, elevated to some spiritual level where only the Elon Musks of the world live, achieving greater, grander things with their allotted 24 hours than we do.
Goal setting is as simple as figuring out what you want and laying out a plan to get there. That’s true for setting goals for saving money, paying off debt, buying a new home or even starting a business.
Goal setting clicked for me when I was a high schooler making a Doug-Flutie-Hail-Mary-Pass to get into Boston College and again when I decided to climb mountains.
There isn’t an area of your life where setting a goal isn’t beneficial - being a better spouse, being more intentional as a parent, giving more to charity, running your first marathon, or for me, climbing to the top of Mount Washington in the depths of winter- all these require that you know what you want and that you make a plan to achieve it.
As a financial life guide I use goals to help keep my clients on track toward what they really want in life. In working with regular people who don’t love financial planning I’ve found there are simple, repeatable steps we can all take to setting goals that are both achievable and gratifying.
Identify what you want out of life
When we first meet with clients at Blue Blaze we get to know them with some specific questions about their family, their occupation, their favorite recreation and what motivates them to get a picture of their ideal life. (We wrote more about this process here in a blog about robo vs human advisors.) Through the guided process, our clients reflect on their core values which leads them to manage, save and spend their money with greater purpose.
Before I officially became an outdoorsman I was looking for a personal challenge that would test my own perceived limitations and pit me against the hardships of nature. I wanted an experience that required both stamina and planning, but not a year of intense training or significant expertise. I love camping so hiking appealed to me, but I wasn’t ready for ice climbing frozen waterfalls. “Hiking the whole Appalachian Trail” had always seemed like a noble, outlandish, crazy dream, one I wasn’t even sure deep down inside that I wanted to do. But as I spent more time contemplating a “respectable challenge, the more I set my sights on attempting the full Appalachian Trail.
Contemplate what you really want to do or achieve and seriously consider the amount of effort you are willing to “invest” into such an endeavour. Your ideal goal is something you want to commit to. Not, something you MUST commit to. If you hate hiking, getting to the top of a mountain should only be achieved by driving. Otherwise that walk uphill would be a nightmare! Choose where YOU want to go. Identify your unique want, not a ‘have to’. Then reaching that goal won’t suck. It will actually be fun.
Give yourself some thoughtful alone or partner time and consider your goal.
- What you’re trying to achieve
- The importance of achieving
- What you’re willing to do to get there
Create a physical goal
If you’ve done Couch to 5K you know that you don’t start running three miles on your first day of training. Step number one is: Get off the couch. The 5k training program is based on nine weeks of gradual progress to help you transform from couch potato to a person who is confident running 5K. In fact, the 5K training program could be called a walking and jogging program, as it allows you to vary the pace to suit your fitness levels. The goal of course, is to run a 5K, but the side benefit is obviously much larger.
You can easily apply this to your financial life like a young couple I’m counseling right now. Their dream is to buy their first home within the next three to five years. Ok - Goal: Buy first home. But sometimes the identification of the goal leads to other questions. “How much home should you buy?”
Ok - let’s answer that based on some cash flow and affordability exercises. Now that we know how much house to buy, we have to begin to save for what will be the biggest investment of their lives. To do this we’ve identified how much money needs to be saved every month. Breaking it down into a manageable monthly sum keeps the mountain (ie the large down payment that lies ahead) from being overwhelming and it helps them see regular tangible results. The expectation is also important here - they are not going to reach their goal overnight. To come up with the funds for a down payment on your first home is not something people normally just have sitting in a bank account (although good savers do!). By getting ahead of the goal, my clients will be those good savers who, in three to five years, will have the funds to put into such a great investment.
Count the cost
Every goal will cost you something, if not in money, then in time or brain space.
When I decided to hike the Appalachian Trail from Springer Mountain, Georgia to Mount Katahdin, Maine, I researched and found what it would cost me to train in my spare time, buy equipment and take off work for six months. I also looked into what living in a tent would cost me in comfort. I was young and without kids so it made sense for me to make the long hike in one shot, but others do it much differently.
On my hike I met a lot of people who were “section hikers”, people doing the whole 2,200 mile trail in sections instead of all at once like I was doing. Some people would break it up into “mini-thru hikes”, tackling the trail in third sections over a three year period. Others were building it into their lives one week per year at a time. Those people who are truly successful in achieving their dreams are flexible and committed, fitting the goals into their life and their life around their goals. Maybe your goal isn’t hiking. It could be world travel. Is it your priority to leave your family to achieve your goal in one period? Can you afford the cost of a long trip like that? Or could you get that same satisfaction by doing a weekend or weeklong trip?
The lesson there: You can still attack a big goal even if your time or money is limited. Set your own goals. Hike your own hike.
Develop a plan
Let’s go back to that young couple I mentioned who want to buy their first home in a few years. They also still have student loans to pay off. To get them the cash and credit required we need to make both savings and paying off the debt a priority. To make a realistic plan we need to balance these priorities against their current lifestyle. After we identified what they need to save per year we broke it down to a weekly basis. This enabled the couple to evaluate weekly spending directly against their goals. Together they identified that they spent on average, $300 a week on eating out. This provided a good starting point of balancing lifestyle choices - the importance of “want now” experience vs the “want in the future” experience.
Want to get your priorities in order? Ask yourself, “Am I willing to reduce my ‘going out’ budget in order to save for/afford a higher priced home, or do I take the ‘live for now’ approach, keep the eating out budget, and accept a lower priced home?"
Now we’re talking practical financial management. When clients come to me for financial life guidance I ask them questions like this to help them clarify what they want, form a plan and then give them parameters to keep them on track. Then spending choices are easy.
After our initial meetings the couple and I set out a goal and a plan: direct a portion of their dual incomes to student loan payments for 3 years, savings for the house in 5 years and savings for liquidity. We all agreed with the plan and made a date to reevaluate in a month because we know that plans on paper are one thing and turning down a purchase when there is a great sale is another. I told my clients, “Don’t expect this to be easy up front. If it turns out that this can’t work then the goals need to change.”
We set the initial goal, not because we knew it was a perfect fit, but because we needed to get moving in some way and test its feasibility. If a plan becomes too onerous it doesn’t mean you’ve abandoned your goal. You just need to allow yourself flexibility to tweak it. And if my young couple can’t curb spending and don’t want to let go of their goal, then the only other thing to do is make more money. It’s a pretty simple formula. Sticking to the formula is the hard part.
When I set my goal to walk the Appalachian Trail, I determined how I wanted my experience to be. This is critically important and if I could impress anything upon you, it is these four simple words: “Hike your own hike.” This means, hike the length of the trail however you want. For example, “purists” believe that a true thru-hike only occurs when a hiker literally walks every stride on the white-blazed Appalachian Trail. For other hikers, the trail is more for the experience instead of a strict book of rules. These hikers would still spend 6 months out on the trail, but if they start to get behind, they may take shortcuts or hitchhiking ahead past a section. I personally fell in between these - I wanted to walk from Georgia to Maine, but didn’t want to commit to every step of it being on the white blazed Appalachian Trail.
I’m happy with my choice because it opened me to more flexibility with my plans. While I never skipped a section by car, I did take some blue blazed trails (see where we got our company name ;-) ) that were more scenic and actually canoed North on the Shenandoah River rather than hiking the trail that cut through the park. This turned out to be a great choice as I not only missed the July Fourth crowds, but had another unexpected and amazing experience spending a week paddling up a river. But the point is I consciously added some flex to my hiking plan so that I wouldn’t feel as if I had failed if I stuck to a rigid rule system. I thought about what my goal meant to me and how I wanted to achieve it. By adding flexibility into my plan, I would have a much higher shot of getting the experience I was hoping/walking for. Hike your own hike.
So now your goal. Have you given yourself permission to dream for an afternoon, an hour?
That’s your first step and you can start today. Take some time to contemplate what you really want and how important it is to you. Your heart and body and mind know the most important goal you want to achieve - and you’ll know it too if you give yourself a little space to reflect.
Then it’s time to partner with a financial life guide who can look at your family, your job, your hobbies, your motivation, and help you dream bigger, and more importantly with a goal and a plan to achieve those dreams.
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