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common mistakes

Let's Get Started

Somewhere, amidst all the clutter and confusion, most of it fueled by our innate ability to procrastinate, lies something subtly important; a starting point.  

Of course the bigger question remains, why we don't start things. Especially the things that we know we should start and just can't seem to begin.  

We convince ourselves, I think that the reason that we can't change jobs, or set out on a new career or make a radical change to our diet or overall better health, is that change is hard. We've been told that change is hard almost all of our lives. True we are creatures of habit and habits are hard to break.  But why is that?  If you had little problem learning to smoke, why is "unlearning" to smoke so hard?   Can't you just reverse the process? 

color-correct-coffee.JPG

Perhaps, the reason we can't fashion new ways of doing things, or start a new habit is that we're convinced that if we don't start, well then we can't fail.   

The notion of not getting it right is always a better outcome than the notion of "not getting it at all."  

Better Progress, Better Goals

The "keeper" of the details. 

The "keeper" of the details. 

As the New Year gets started, it'll be time once again for setting some goals. Some of those goals will be personal ones, exercise more, lose some weight, etc. Some of those goals will be financial ones too. You can increase your chances of not reaching a goal simply by failing to outline it in defined and measurable terms. If you’d like to “sort of” meet that financial goal looming on the horizon, paying for your oldest child’s college or getting that wedding money set aside, do what most people do; leave it vague and murky.  Or, try another way.

As the New Year gets started, it'll be time once again for setting some goals. Some of those goals will be personal ones, exercise more, lose some weight, etc. Some of those goals will be financial ones too. You can increase your chances of not reaching a goal simply by failing to outline it in defined and measurable terms. If you’d like to “sort of” meet that financial goal looming on the horizon, paying for your oldest child’s college or getting that wedding money set aside, do what most people do; leave it vague and murky.  Or, try another way.

We work with people all the time on the correct way to set goals. Goals need to be defined, specifically. You need to be able to state in specific terms how much you’re going to need, how much you ‘ve saved and/or can save, and how long you have to go until that goal needs to be met. Sending your oldest to college isn’t the same as: “I need to have $50,000 set aside eight years from now and I’ve already got about $7,000 and can save another $100-$200 per month.” Typically, clients come to us with the former rather than that latter. It's our job to change how you look at your goals. 

With a specific goal in mind, you’ve got clarity about what must be done. It’s a transformative process and takes what had only really be a wish and converts it to a goal. Now progress can be measured, you can tell if you’re on or off track or not and you can adjust along the way. With specific goals you have to commit to an action and only once you’ve committed to an action, can you tell how you’re doing. Absent specifically stating goals the end result is likely to be our continued ability to avoid confronting our lack of progress. After all, why bother assessing progress when that progress can’t possibly be measured?

There’s a lot to be said for knowing where you are relative to a goal.  Should you continue to put away money to reach it or has the market given you enough return that funding can be scaled back? Tuition went up? Not a problem you can tell how much you have to adjust either your return on your money, your funding or both. As advisors, one of our primary responsiblities is to monitor progress towards your goals in very specific terms. Appropriate goal setting brings you both comfort and clarity because the effort is defined in measurable terms.

A good example is paying for college costs. Absent specific goals, parents tend to avoid the matter entirely or only put the bare minimum towards paying tuition costs. That’s why a recognized expert has said that “college funding isn’t a college problem, it’s a retirement problem” because lacking the proper context; many parents raid their retirement plan to pay for college. And, they do so at the worst possible time, when markets are down or when they’re relatively close to retirement age.  Missing one importatn goal in order to pay for another can be avoided with the clarity that comes with proper goal setting.

So get a pad and something to write with and list each of the financial goals that loom on the horizon and ask yourself the simple questions that will make the biggest difference:

  1.      How much will I need
  2.      How much do I have
  3.      How much can I save
  4.      When do I need it by

That’s how to tackle your goals head-on instead of just hoping for the right outcome.