Bite-sized goals

By Gary Silverman, CFP®

Goals are good things to have. Big goals, the goals that will stretch us, are often recommended in order to really make a difference in our lives. But when goals seem out of reach they can defeat us rather than empower us.

In my practice, when we project retirement needs for clients, we often end up with a rather large dollar figure that they will need decades into the future to pay the bills. Figures in the millions are not uncommon. Say I sit in front of a 40-year-old couple. After looking at their anticipated retirement income and expenses and taking into consideration what they already have saved in their retirement plans, I give them the verdict. They will need to accumulate an additional $1 million to provide the standard of living in the future that they are used to currently.

Trust me when I tell you that for most of the people across the table, the final amount can seem impossible. In this case, assuming the couple can manage a 7% average return, that $1 million goal would require savings of around $1000 per month. Most people would give up before they started.

Indeed, retirement savings and other financial goals you may have like paying for college for multiple children, eliminating a large debt, or starting a business can seem daunting. So while I do encourage you to do the work to find out just what the full end-goal is, you need to first chop it into bite-sized chunks. It’s like the proverbial “how do you eat an elephant” question.

Maybe it’s just dining out one less time a month, buying a slightly cheaper car, or choosing the 3-star hotel instead of the 4-star. You might be able to put away an extra couple hundred a month. Sure it’s not $1000, but it’s a start. Incremental successes give you positive feedback, making it easier the next time around. Brain research seems to indicate that these little “wins” can be a powerful force in setting good long-term habits.

While I’m on the subject of goals, I want to remind you of the SMART principle. It’s an acronym to help remember what makes a good goal.

Specific: What specific thing do you want to accomplish?

Measureable: How do you know when you get there? (Even better if you can also know how close you are to success.)

Achievable: Is it realistic that you can accomplish the goal? (Stretching is okay…splitting into two is not.)

Relevant: Does this fit you? Does this fit the situation you are in? If part of a larger goal, is it a stepping stone along the journey?

Time: Without a due date we are allowed to procrastinate. (Flexibility is allowed, as long as it is reasonable.)

Goals are a great tool to get you where you want to go. In fact, it’s hard to imagine getting anywhere without them. So go out, grab your knife and fork, and start eating that elephant.

This article was published in the Wichita Falls Times Record News on May 29, 2016.