Good Financial Reads: Setting Financial Goals (Part One)

Real financial planning is the process of aligning your money with your life.

In this month’s article, I am going to show you how your values can create a better financial plan and ultimately drive better financial behavior.

Setting goals is an efficient way to accomplish almost any task.  Ask any athlete, sport or life coach, teacher, or financial advisor. In financial planning, meaningful goals are the emotional payoff that helps us delay gratification and stick with our plan to achieve what really matters to you.

It is for this reason that most financial planners start with goals. They may use them to estimate the cost of funding each goal and design a savings plan. Or given a savings plan, they can estimate the likelihood of achieving stated goals. Some advisors even use some qualities of your goals, like the time horizon or the objective of the savings (income vs. wealth creation, for example) to help define the risk profile to use in selecting the riskiness of your portfolio. 

The other day, my wife, Kali, mentioned she wanted to thank me for something.

We recently bought a home we both love in upstate New York. It sits on a little mountain and has an incredible, western-facing view.

We were sitting on the deck watching a gorgeous sunset (an activity we don’t imagine tiring of anytime soon), when she said this, and added that it was a bit of a long story to explain.

Financial planning helps you achieve your most meaningful goals in life. This post helps you set your own goals and discusses how to use your goals to drive the design of your financial plan and your investment allocation. 

THE WHY, WHAT, AND HOW OF FINANCIAL PLANNING

At DESMO, we start the financial planning process by discovering your values. We make a distinction between values and goals. Values represent what’s important to us. They are the why of our plan, like time with family, experiences, sense of purpose. 

Setting goals might sound like the most tedious thing on your to-do list. It might not seem very exciting or fun. (What’s much more fun is achieving the goal and getting to use your money for what you wanted!)

This can be especially true if you’re doing your goal planning the right way,  and setting SMART goals.

Those are goals that are Specific, Measurable, Attainable, Relevant, and Timebound… and it’s a lot of work to develop a goal with that much detail!