Simplify Your Goals With Lists
“The only goals you don’t achieve in life are the goals you don’t set.”
I was struggling to decide on a destination for a vacation. I had a general idea of what I wanted - relaxation, good food, and some cultural experiences - but I couldn't settle on a specific place. I felt overwhelmed by the endless possibilities.
Then, I decided to make a list. I started jotting down all the potential destinations that came to mind. As I added more places to the list, I began to notice patterns. Certain types of destinations kept appearing, while others were quickly dismissed. This helped me narrow down my options and focus on the places that truly aligned with my preferences.
Seeing these options laid out in front of me also made it easier to compare. I could weigh the pros and cons of each destination more objectively. This clarity was crucial in making a final decision.
In the end, I chose a destination that I hadn't even considered initially, but it turned out to be the perfect fit.
Just like when I was planning for my trip, the simple act of making a list of your financial goals can help you uncover your true desires and make a more informed decision.
What are your most critical financial aspirations? Most of us can easily answer this question by naming a few generic goals. But by doing so, we may be selling ourselves short.
Setting goals without careful consideration is not the best approach for developing strategies or making financial plans. It also doesn't help us prioritize or maintain focus on our goals.
The truth is, a simple exercise can help us set better goals. By doing so, we increase our chances of achieving them.
What is this exercise, you ask? We would create a Master List.
Let's explore how it works by examining the compelling findings of a recent study and understanding the benefits of using lists in financial goal setting.
Then, you'll see if your goals change for the better after you complete this quick exercise.
Our Top Goals Can Be Modified
What is your primary financial goal at this moment? For many people, the most common answers to that question are retiring or purchasing a house. However, after viewing a comprehensive list, at least one in four individuals altered one of their top goals. Furthermore, almost three in four individuals modified one or more of their top three goals after seeing a master list.
Benefit: Lists assist us in visualizing our primary objectives and broader goals more clearly.
Goals Can Be Refined
How clearly defined are your financial goals? Initially, many of us may not establish well-defined goals. General goals can hinder our success. However, over 25% of people would clarify their primary objective by reviewing a comprehensive list, moving away from generic goals towards more specific ones.
Why?
Because a list can elaborate on generic goals, revealing more of the intent behind them. In fact, many individuals who initially prioritized "growing wealth" as their top financial goal often change their minds after reviewing a list. They select a more specific goal that better reflects their reasons for wanting to increase their wealth.
Benefit: Lists can add specificity to our goals, keeping us motivated and helping us identify more effective methods to achieve our objectives.
Correct Your Misconceptions About Your Goals
To what extent does a limited grasp of finance impact your financial objectives? Lists can aid in answering this query and identifying potential misunderstandings. Anyone can be misled by common misconceptions about money and finance. Paying down debt is a prime illustration of this. Over 25% of people who prioritize debt reduction adjust their goals after reviewing a master list.
Why?
It dawns on them that paying off debt and saving for retirement are not mutually exclusive endeavors.
Benefit: Lists can educate us about our options and set the record straight when our thinking or facts are off the mark.
Discover The Emotions Behind Your Goals
To what extent do your emotions shape your financial goals? Your emotions may play a more significant role than you think, and that's not necessarily a negative. While emotional decisions might not always be optimal in finance, they can be valuable in setting goals. Emotions can reveal the true purpose behind our goals, answering the "why" of our financial aspirations.
This becomes evident when examining how many individuals adjust their primary goal after reviewing a comprehensive list. At least 50% tend to revise their top goal to align with an emotion-based objective, such as "feeling more secure financially" or "not being a financial burden to my family as I age." Moreover, the emotional rewards from achieving our goals can be just as valuable as any financial returns.
Benefit: Lists can illustrate the emotional rewards associated with our financial goals, highlighting that it's not solely about the numbers and bottom line.
Cognitive Blind Spots Can Be Unveiled
Despite our intelligence, our knowledge is limited. No one possesses complete knowledge. Additionally, we are susceptible to unconscious biases that can hinder our goals. For instance, the "present bias" may lead us to prioritize immediate rewards over long-term gains.
However, a master list of goals can provide a fresh perspective. Such lists can put things into context and reveal assumptions and overlooked aspects.
Benefit: By recognizing our biases and blind spots through lists, we gain a clearer understanding of our goals and can make better decisions.
Effective Goal Prioritization
Reflect on your financial goals and overall life aspirations. How will achieving these goals contribute to your happiness? Surprisingly, many individuals are uncertain about their true desires. Understanding our preferences and identifying what genuinely brings us joy can be challenging.
This uncertainty makes prioritizing goals difficult. However, creating lists can be transformative. Lists help us clarify our wants, understand our sources of happiness, and set priorities that align with what truly matters to us.
Consider a simple example: when you're at a restaurant and struggling to choose a dish, that "Aha!" moment occurs when you see an appealing option you didn't realize you wanted until that very moment. This small revelation exemplifies self-discovery. Similarly, creating lists in the context of financial planning and goal setting can lead to profound discoveries.
Benefit: Lists help us learn more about ourselves, uncover our genuine desires, and identify what will genuinely make us happy. Additionally, lists assist us in prioritizing and establishing goals that resonate deeply with our values.
Action Items
It's time to explore the potential benefits of a Master List for achieving your financial objectives.
Reflect on your top three financial goals. If possible, write them down to make them more tangible.
Refer to the comprehensive list of goals provided below. As you read through each option, keep your own aspirations in mind.
After reading the list, how many of your goals changed? This exercise can be eye-opening, regardless of whether your goals shifted.
Why? Many of us don't fully understand ourselves, and this simple activity can help us uncover our true desires.
Lists can be more effective than open-ended questions or complex techniques when setting goals. They can broaden our perspective, helping us envision the big picture and what we want from it.
I hope this exercise helped make goal setting more effective by keeping you motivated and on track as you work towards your objectives.
~Alex
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*Depending on the time period and how returns are calculated. Value of advice sources: Envestnet’s “Capital Sigma: The Advisor Advantage” estimates advisor value add at an average of 3% per year, 2023; Russell Investments 2023 Value of a Financial Advisor estimates value add at approximately 5.12%; and Vanguard, “Putting a value on your value: Quantifying Vanguard Advisor’s Alpha®,” 2022, estimates lifetime value add at an average of 3%. The methodologies for these studies vary greatly. In the Envestnet and Russell studies, the paper sought to identify the absolute value of a set of services, while the Vanguard study compared the expected impact of advisor practices to a hypothetical base-case scenario.