Each year many people set lofty financial goals, only to realize shortly thereafter that they are not realistic. Why is that? Rooted in psychology, it isn’t much of a mystery that working towards achievable goals will propel you to setting incrementally higher goals over time, while unrealistic goals often leave people feeling frustrated and defeated.
The positive news is that the solution resides in applying the same skills many people have already mastered in their career to their financial life. Sales and Marketing leaders in particular understand the value of sticking to a thoughtfully crafted process, and that a handful of aggressive tactics don’t amount to a strategy.
Here are some of the things you can do to stay on target:
Be specific – Every financial goal is important, and one of the key steps along the way is charting a course leading there. There are two reasons why being process oriented is helpful: you need to believe in what you are doing to stay motivated, and you need to have the patience for it to play out over time. This could be an incremental increase in payments towards a mortgage for some, or saving and investing a certain amount per month for others.
Have more than one goal – This sounds obvious, but you’ll want to work towards more than a single goal at one time. This is because as one’s personal situation changes over time, their financial goals tend to adjust with them. Rarely do financial goals appear or disappear entirely, though priorities and attention inevitably shift. Diversification is valuable in that it helps to avoid being entirely unprepared for any one goal.
Be realistic – Intellectual honesty is key to setting appropriate expectations. The financial goals that you select are entirely within your control and for your benefit, so this deserves care and attention. You’ll want to find balance between something you would count as a legitimate personal victory, and also which you are confident you can achieve. Many people take things too far, only to end up with a lasting motivational hangover.
Start early – The best mindset for “starting early” is to stop waiting, regardless of where you are. One of the common traps that people fall into is that because they are behind where they’d like to be, it isn’t worth trying at all. This is because financial inertia can be very strong, meaning that the hardest part is to start. Of course, it requires sustained effort but it gets easier over time. In the same way that financial goals don’t suddenly appear or disappear, distractions and competing financial priorities are also a constant.
Staying focused - When you’re considering what you’d like to work towards in your financial life, don’t forget that this is an endurance sport and consistency is what matters most. To put this in perspective, you’ll go farther doing nine 3-mile runs than you will by running a marathon. The difference is that one has almost no stress or recovery period involved.
If you’d like to discuss your financial goals and what you can do to get started working towards them, Paceline is always here to help if you have questions.
This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech executives, physicians, and those seeking financial planning services.