couple financial goals

Setting Effective Financial Goals

In the business world, top companies kick off their “Q4” by gathering together their leadership teams to assess what’s gone right this year, what’s gone wrong, and what steps they can take to finish the year with strong forward momentum. My partner, Katie Brown, and I do the same thing with an off-site meeting to reflect on the current year and brainstorm for the following year. We usually wrap up the full-day strategy session at a dinner with our spouses to discuss past performance and future opportunities for our business and our families.

The fourth quarter of the year is a good time to think about your personal financial goals, as well. Preparation and goal-setting can provide a real sense of personal accomplishment, especially after a year that may have felt more challenging.

Make s.m.a.r.t. financial goals

Developed as a management guide for business goals, George Doran’s concept of building S.M.A.R.T. (Specific, Measurable, Attainable, Realistic, Timebound) goals has been adopted widely and can be used to help build effective personal goals.

However, it can feel overwhelming when there are so many factors outside of our control. I suggest starting with three simple questions to help you think about financial goals that are effective and attainable:

  1. What are my top goals for the next three months?
  2. What can I do today to reach my financial goals?
  3. How will I hold myself accountable?

What are my top goals for the next three months?

We’ve all had to deal with a myriad of challenges and changes in the past few years. Those experiences probably had a profound impact on the goals you set for yourself way back in January. Perhaps, due to personal challenges, professional changes, or economic factors, some of those goals just aren’t very realistic right now. Or perhaps the unique needs of your family and community inspired new goals that have jumped to the top of your list.

The space between the things we want to do and the things we can do might feel overwhelming. If you try to do too much in a short space of time, you’ll only scatter minimal progress across targets that you won’t be any closer to hitting. Instead, reflect on how this past year has affected you personally, professionally, emotionally, and physically. Focus your attention on one or two practical financial goals that will give you the most fulfillment and that are attainable in the next three months. File away any goals that don’t make the cut for your yearly goals game plan. If we resolve to finish what we started we can then compound that success.

What can I do today to reach my financial goals?

Once you’ve broken down your list of goals, it’s time to break down those goals even further into actionable daily steps. These little achievements will build up to major accomplishments over time if you’re diligent about crossing them off your to-do list.

This step can help you improve a vague goal, like, “I want to give back,” with a more specific and actionable step, like, “I’m going to call the local food pantry and see if they have any volunteer opportunities.” Making that phone call will lead you to another actionable step that you can take tomorrow, and so on.

I great read at this time of year is the book Deep Work by Cal Newport, which is a great reminder of the importance of focusing on the non-urgent, important work. Each day is an opportunity to be brutally honest about the most important actions that will make incremental progress.

How will I hold myself accountable?

Effective goal setting creates a stepladder that builds on the previous day’s progress and keeps you moving closer to your ultimate goal. But some days getting up on that ladder is easier than others.

Many folks maintain motivation via short-term rewards. For example, when you’ve made it halfway to your savings goal for a down payment on a new house, treat yourself and your spouse to a nice dinner. If you accomplish your daily job search tasks for four days in a row, give yourself a Friday afternoon off and watch a movie or play a round of golf.

Another strategy is to track your progress. There are many online tools and apps you can use to check off daily tasks. It could also be fun to personalize a pen-and-paper journal that combines your to-do lists with reflections on your journey. I always carry a Moleskine notebook with me and I have dabbled in the Bullet Journal technique to help me manage my days and note my lessons learned along the way.

Finally, there’s no stronger accountability system than other people. Knowing that your running buddy is waiting for you on the trail will get you out of the house even when your bed is especially cozy. And whatever you’re trying to get better at, you can find groups of likeminded strivers online who will inspire you to write more, cook healthier meals, sand down the rough edges, and learn the next three chords.

We would love to be part of the support system that helps you achieve your financial goals next year. Reach out to schedule a Q4 review and discuss where you want your financial plan to lead you by the end of the year and into next. We are here to help.