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The Four Pillars of Financial Planning: How to state your goals

By Peter C. Karp

The first step in successfully reaching a goal is to state it properly. The better you state the goal, the easier it is to create the action plan. We help clients organize and prioritize their goals for execution. While this sounds easy, it is not. This is why some of the most successful people in business and sports have a mentor or coach. People have good intentions but few reach their goals on their own. Here are the criteria to setting and reaching financial goals:

Specifics - You say exactly what it is you want to do. A common goal for many of our clients is given their spending level how much do they need to save to be sure they have enough money in retirement. They are seeing that their friends are living longer and afraid they will not be able to cover all the expenditures in retirement, i.e.: healthcare costs, life style, helping kids and grand children. They have never had to abide by a budget and they do not want to start in retirement. Hazy goals are doomed to failure.

Measurable - The goal must be stated in a way that allows you to know whether it has been achieved. In addition, you should be able to see whether you are getting closer or further away from the goals so that you can modify your action steps accordingly. Having a comfortable retirement income is not measurable. You need to quantify the dollars needed and the structure to save for the goal. The key is to breakdown the goal into action steps and then execute.

Attainable and Realistically High - Goals must be lofty enough so it gives you something worth working toward. If the goal is too low it will not stimulate you to put forth extra effort. On the other hand, if the goal is unrealistic you will be discouraged and will put off starting to work toward the goal. You have to have the critical mass to obtain the goals. You need a funding source and a desire. The desire comes when the goal evokes a feeling/ emotion.

Time-Based - When do you want this goal completed? Retirement? Buying a home? Sending your kids to college? Be honest, are there goals you have talked about for years that are still on your to-do list? If there are, it is probably because you have not committed to a deadline. Retirement could be triggered by a specific age or specific event such as selling a business or promoting junior partners. Goals can only be accomplished over time.

Disclosure: The posted information is for informational purposes only. This message does not constitute an offer to sell or a solicitation of an offer to buy any security. All opinions and estimates constitute Karp Capital's judgment as of the date of the report and are subject to change without notice. Accordingly, no representation or warranty, expressed or otherwise, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or timeliness of the information contained herein. Securities offered through Infinity Financial Services (a registered broker-dealer, member FINRA, SIPC). Infinity Financial Services and Karp Capital Management are not affiliated companies.

 

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