If you’re like most people, you have no trouble setting goals. The struggle is in meeting them. It’s easy to map out things you want to achieve – a healthy retirement, a vacation home, college funds for your kids – but it’s hard to do the dirty work to get there.
Part of the problem is that we’re distracted. A Northwestern Mutual survey, conducted earlier this year, found that three out of four people feel that the pace of today’s society is making it harder to achieve their long-term goals. Financial goals, the survey respondents said, are some of the hardest goals to stick with. We want to follow the rules, create a retirement savings plan, spend less and save more, and pay down our credit card debt, but something is getting in the way. What is that something?
In my opinion, there are at least two sides to the problem. We’re too ambitious, and thus get overwhelmed easily. And it’s human nature to want immediate gratification, which means that new pair of shoes takes precedence over a stable retirement.
One way to combat both of these forces that are pushing back against us reaching our goals is to shift your focus from the ultimate goal, and instead aim to meet benchmarks. Think about your goal as if it’s a set of MapQuest directions, or the turn-by-turn commands that come out of your GPS. Each turn is a benchmark that will help you reach your ultimate destination. So let’s say that, as your new year’s resolution, you pledge to start building an emergency fund. You want to have $5,000 by the end of the year. That amount seems unfathomable. But what it really means is that you need a little over $400 a month. That’s $100 a week, or just $15 a day. Suddenly, it seems more manageable.
And if it doesn’t? If breaking your goal down into benchmarks doesn’t work? Then you need to consider the fact that your goal may not be well defined. Maybe you want to “save more” or “get a new job.” What does that mean, exactly? What would that new job entail? How much do you want to save? It’s hard to meet a goal – and feel satisfied with what you’ve achieved – if you don’t define the specific parameters. So decide that you’d like to get a new job as a manager at X company, or you’d like to save that $5,000 this year. Then go back and start mapping out your benchmarks.
If you still find yourself struggling, you may be over-extending yourself. If, even with benchmarks, your goals seem impossible, you’re asking for failure. If you don’t think you can achieve, why even try? Too many lofty ambitions could easily sabotage your efforts. Instead, scale back and focus on one or two things. Your retirement over your kid’s college fund (retirement always takes priority). The car you want to buy instead of a down payment on a house. You can still meet all your goals eventually with carefully planning, but not at once. If you’re struggling to prioritize, this order works for me: emergency fund, adequate insurance coverage (life and disability), credit card debt, retirement savings. It’s worth your time and money, however, to see a financial advisor to come up with an individualized plan of attack.
Finally, don’t be afraid to reward yourself for good behavior. That might mean an occasional treat if you’re on a diet, or a small purchase if you’ve been making progress saving for a larger goal. Build these items into your overall plan so you’re not cheating, but getting what you’ve earned.