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Are Your Financial Goals Driving You Crazy?


Most financial planning is goal-oriented. You write down all the goals you want to achieve in the future, you figure out where you are today, and then you put together a plan that will get you there. Voilà, you figure out that you need to put away $10,000 every month until you retire, and you will accomplish 50% of your goals!

I’m exaggerating a little bit, but it’s easy to see how this traditional view of planning could drive you crazy. Either you give up too much in the short term for uncertain benefit in the future, or you don’t even bother to plan because you figure “what’s the point anyway?”.  You know you need to “save for retirement” but have no idea how to get started, or you’re afraid of making a mistake. What if you don’t even know what your goals ARE?

Take a deep breath.

Your goals will change over time

What if one of your goals was traveling the world during retirement, but your health deteriorated by age 65 and you couldn’t travel? What if you planned to pay for your children’s college tuition, but one of them decided to start a company at age 18 instead of attending school? The further out your time horizon goes, the more likely those goals are to change. There isn’t a single answer or a right answer as to what your goals should be, and when you should achieve them.

Your current situation will change

What if you lose your job and need to dip into emergency savings? What if you get married, have a couple of kids, and need to move to a larger house? What if you decide to start a business? They way your life is today, is not the way it will look tomorrow. Things can and do happen, but this is the area where you have the most control to get things back on track.

Your original plan might not work

Markets tank. Average returns are “average”, not actual. Actual returns can be -10% one year and +20% the next. That’s an average of 5%, but not if you’re the guy who sold after the 10% decline. People make mistakes. Maybe you shouldn’t have bought that house that was over budget but had the awesome remodeled kitchen (’cause let’s face it, you eat out most of the time). A plan is an ongoing process, not a one-time event.

What CAN you be certain of?

  1. You need money to live. You could need a little or a lot, but there is no getting around the fact that you need an income today and in the future, because…
  2. You will have expenses. And many of those expenses will be of the rising variety. A gallon of milk doesn’t cost ten cents anymore, and healthcare isn’t getting any cheaper.

So what do you do?

I’m a big fan of Carl Richards’ The One-Page Financial Plan. In it, he states that “it’s best to create a financial plan that takes uncertainty as a given – that sets you up to make adjustments as quickly and painlessly as possible so your disappointments won’t spiral into disasters”. I’m talking about flexibility here. Flexibility so that when inspiration strikes, and your goals change, your life changes, or your plan isn’t working, you can take advantage of it and pivot.

How can a financial plan give you flexibility?

  • It can help you clarify where you are today. You’d be amazed how many people don’t know their financial “state of the union”. Take stock of all your assets, income, resources, debts, expenses, and commitments. Also know yourself, your talents, weaknesses, and personal values. Flexibility comes when you figure out that you could sell an asset to raise cash if you wanted to start a business. It comes when you realize that you could cut out your daily Starbucks habit, and play golf twice a week in retirement instead of once a week. It comes when you negotiate a higher salary because the market is hot for your skills. It helps to know that you have $100k in equity in your home if you want to move.
  • Now get real about your goals and the tradeoffs it will take to get there. Maybe your daily Starbucks really does add that much happiness to your life that it’s worth giving up that extra day of golf in the future. Someone else may gladly eat ramen noodles every day if it means playing golf or traveling in retirement. Flexibility comes in the form of informed decisions about how today’s choices may impact tomorrow’s reality. You may be able to fund 4 years of private college tuition, but what could you do instead if you only fund 4 years of state university? Make sure your goals are your own and not someone else’s. Give yourself permission to change your mind.

The great thing about holistic financial planning as I practice it, is that’s about maximizing your life as a whole. Part of the reason I offer an ongoing monthly coaching option with my financial planning is that it’s not an event, it’s an ongoing process of managing life’s changes. Think of me as your financial “phone a friend”. Your financial plan should be about making your life easier, and inspiring you to live a full life. It shouldn’t make you crazy.