This is the season of goals and resolutions. Yet setting the wrong goals can become more of a burden than they are worth.
Let’s be clear, I am pro-goals. Well-defined objectives are essential not only to financial planning, but to life in general. Goals give direction to the work we do and help us measure success. Without them we are robbed of a sense of growth and progress.
Yet resolutions made with the best of intentions can set you up for failure.
At the heart of the issue is time. You’re busy. Busy at work. Busy at home. And when you finally make time for your finances, you just want to get things done. So you make a list of the things you need to get done – refinance the house, finish the estate plan, bump up your retirement savings. And these become your ‘goals.’
But these aren’t goals. These are a to-do list masquerading as goals. There is benefit in checking items off your list, no doubt. But these have no place sitting next to your professional, family, or spiritual aspirations.
Financial to-do’s serving as goals is the equivalent of saying ‘My vision for the future is to spend more time managing my finances.’ Or, ‘I want to work harder on my money.’ Work ethic is an admirable sentiment, but if you are anything like most of the people I see, it isn’t something you lack. You already work hard.
Bad financial goals get you in trouble. If you accomplish them, and check the boxes off your list, great. But you are left fatigued and with less capacity than you started. By achieving more, you had less.
As we head into 2021, it is easy to think that our capacity will remain unchanged. If only we were so lucky. With the past year of remote work and quarantines, we may be tempted to believe that we will have plenty of time to do our financial tasks. As the world reopens and our calendars fill back up, we can easily find ourselves with many items on our lists that we simply don’t have time to get to.
Instead, challenge yourself to measure your progress not by the tasks that you accomplished, but by the time you were able to protect. Instead of simple tasks, your goals should be focused on your freedom, not on your commitments.
This is not a natural way of thinking. We are much more likely to focus on the immediate and urgent tasks that need to be done. To shift the way you think of your goals, consider following three questions:
- What can be automated? Whether its making transfers into savings, making an online rent payment, or logging in to check your account balance, there are many things that sap us of our time. What are the actions you have to take repeatedly? What are takes up your mental bandwidth that you can easily automate? There has been tremendous innovation in financial technology that can free up both mental and economic resources.
- What can be outsourced to service providers? While technology has come a long way to help you manage many financial tasks, there are some that may not be solved by an app. Reviewing insurance coverage, assessing your investment preferences, and crafting your estate plan are all examples of important actions that need thoughtful attention. You can protect your time by leveraging the expertise and experience of professionals.
- What can be dropped altogether? As you go through life you can accumulate tasks and responsibilities that you continue to do, even though they no longer make sense. What are the subscriptions you don’t use? What memberships don’t you plan on using even after the economy reopens? By cutting unneeded services or tasks, you can save both time and money.
Answering these three questions helps you identify the areas where you can create more capacity in a world set to reopen.
When it comes to your finances, there is no shortage of things you ‘should’ do. Your to-do lists will always be with you. The positive goals to set in this part of your life should be aimed squarely at how they can support real living.
Pursue goals that support your success. Set goals which are freedom-driven. They should not be driven by the ‘things you get done’ but by the capacity you can create after you’ve accomplished what you’ve set out to.
Don’t try to save more. Automate your savings.
Don’t plan to meet with your [banker/agent/planner/attorney] this year. Set an annual review from this year going forward.
Don’t just solve a problem. Create a system that generates less problems to solve.
As you are looking forward to toward the many ways this year will unfold, set goals that create more space in your life. Goals that protect your time in the long run. Freeing time opens up new possibilities. You can get other things done. You have more energy. You can spend time with the people you love. You can build a business.
Take the to-dos off your list. Set financial goals that free you.
Best wishes in this much anticipated new year.