This article was featured in Maine Seniors Magazine, September 2021
What are goals?
Merriam Webster defines goals as “the end toward which effort is directed.” According to Wikipedia, “a goal is an idea of the future or desired result that a person or a group of people envision, plan and commit to achieve.”
Good financial planning starts with setting goals. Sometimes those goals change or evolve and sometimes we discard them altogether. Until you know what you want – you cannot aimlessly shoot off in all directions and expect to get anywhere. And while goals suggest a destination with planning being the roadmap – it is often the journey that provides the most satisfaction.
Types of goals:
Goals can represent reaching for a positive outcome or avoiding a negative consequence. An example of an attainment goal would be aiming for a higher income. An avoidance goal would be not going broke. People look at life from different perspectives and many of us have both attainment (positive) and avoidance goals (negative).
When discussing goals with clients, we often discuss health, family, and finance. These are issues that all ages can focus upon. The more specific that you can be with setting the goal, the better. If you say I want more money – I can hand you a dollar bill and your goal is achieved. If you say I want to save $20,000 by December 31st of this year, then that becomes a very specific goal with a defined time horizon. You can then create a strategy to achieve it by figuring how much you need to save per month and setting that amount to automatically come out of your income.
Benefits of setting goals:
Most people have dreams about what they want to do and who they want to do it with – setting clearly defined goals takes those dreams and helps move them toward reality. Setting goals with specific deadlines and a plan can help us clarify our behaviors, allows for feedback through charting our progress (are we closer or further from our goal?), calls upon our strengths to stay on the path, and really promotes happiness. Striving for something ‘bigger’ that has meaning and purpose which reflects our values promotes positive feelings and relationships, making life that much more enjoyable. As my own children have grown up, I have emphasized the importance of having written goals and setting timelines with a plan that breaks the necessary steps into bite-sized, achievable pieces.
Goal Timelines:
Goals can be daily or weekly, and often the largest/most important goals have longer time horizons. When speaking with clients or younger folks, I ask them to write down where they want to be in five, ten, or twenty years. Sometimes the answer is they don’t know, so then I ask them to start by writing down where they don’t want to be. By consciously engaging our thought process and deciding where we want to be or not – we start to develop our goals.
For retired folks, the goal might be traveling and being active for the first ten years, then transitioning to a quieter lifestyle with an emphasis on staying healthy and spending time with family as they continue on their life journey. I have known other retirees hiking well into their nineties in places like Thailand and Peru with no desire to slow down.
As you enter the latter part of your life journey, your goals may also include philanthropy and/or creating a family legacy. Passing values onto the next generations often grows in importance. Conversations with financial and legal advisors can help put the plans into action.
In the end, you get to work your timeline based upon your health and financial capacity. The ability to shift those timelines as life progresses is key to being happy.
Conclusion:
We all have goals – why not be proactive and write them down? Having discussions with your family and planning for the future can benefit all generations. Teaching younger family members how to set goals and come up with a strategy to reach them can be a priceless gift. Stretching your own ideas of what you can accomplish and then reaching those targets can really enhance your sense of well-being and satisfaction even with very small accomplishments. So go ahead and sit down with a pad of paper and write about where you want to be and who you want to be with today, next year, or twenty years from now.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.