With the recent stock market rally, it seems that people are starting to come out of hiding, or maybe out of shock is a better word, and assess the financial damage to their personal finances. I’ve noticed a steady increase in calls and emails from potential clients regarding financial planning. Most people have one thing on their mind - tell me how bad the damage is and how do I plan going forward.
I think one of the most powerful and immediate steps you can take for yourself is to accept where you are today financially. That sounds easy and obvious, yet we’re dealing with money, which makes it that much more complicated. From this place of acceptance will come strength and power to rebuild. Being proactive by setting financial goals for yourself is a good way to get started on developing your new financial road map and rebuilding your financial nest egg.
Action Oriented Goals vs. Results Oriented Goals
I want to lose 10 pounds.
I want to make X amount of money.
The above are examples of results oriented goals. Even if results oriented goals appear to be sensible and specific, they all too often set us up for failure because the anticipated results will occur too far down the line. They’re a destination, and what we should be focused on is the journey. What happens when we don’t reach this end point quickly enough? We start to feel bad about ourselves and lose our self-motivation.
Results oriented goals like these can become little more than a wish list, composed of things we’d get around to if only we had the time. Meanwhile, day by day, precious little progress is made towards them.
In terms of financial planning, action oriented goals work much more effectively. They’re specific, manageable steps that lead to the desired result. Action goals also work best when stated in positive terms-rewards, not denials. So instead of telling yourself to spend less, you’d rephrase it and say, save more. Spending less may cause feelings of scarcity or deprivation while saving more feels positive and abundant.
One the biggest challenges people face when planning for retirement is that the long term goal of accumulating x amount of money is just that, a long term goal. If you spend all your time envisioning the end result, you’ll have a hard time doing what’s necessary year by year. That’s why I love the idea of setting a large amount of small goals that can be reasonably reached each year. That way you grow accustomed to success and you can congratulate yourself as you move along. Then, if you fail to reach some particular goal, you’ll be far more resilient. Give it a try and bon chance!
