How to meet your money goals in 2019
My brain goes through the exact same exercise around 5 p.m. every Dec. 31. As I don my tuxedo for a night of revelry – OK, fine, I’m usually in sweatpants settling in for a night of board games – I reflect back on the year that was.
Of course I think about fun family moments such as vacations, birthday parties and youth soccer goals, but I’m primarily evaluating numbers: Did we move forward or backward? And by how much?
I don’t raise these queries out of greed. Instead I’m trying to determine whether or not I’m a liar. That’s because at the beginning of every year, I declare a series of goals that can be quantified. And by New Year’s Eve, I’ve either delivered on those promises or not.
The primary categories I evaluate my progress against include college fund deposits, health savings account (HSA) deposits, 401(k) deposits, charitable contributions, and savings account balances.
This list has changed drastically over the years. I used to focus on investment account balances, but I realized that was a giant mistake. Yes, the balances will eventually fund my goals, but I can’t control their variable nature, so I was finding myself focusing on something I couldn’t control – a practice as pointless and frustrating as me trying to elegantly wrap holiday gifts. So if my investment balances fall because of some significant global or domestic event, I’ve made the decision to not care.
But while those accounts may go backward through no fault of our own, if a savings account goes backward, it’s generally our doing. Therefore, I am willing to set a particular deposit goal with a savings account.
With that as background, it’s worth revisiting the elements of effective financial goal-setting, especially as we reach the end of the year.
Be declarative and use numbers
I prefer to start with the phrase “I will.” I like its declarative nature. It doesn’t hedge the way “I’d like to” does. “I’d like to have zero debt” pales in comparison to “I will have zero debt.”
Five thousand dollars in savings, $6,500 deposited in investment account or zero dollars in credit-card debt are all better than saying subjective words like less, full or more. “I will have less debt” or “I will have more savings” leave you way too much wiggle room.
Dates are vital too. If you don’t use them, you have an idea, not a goal. “I will have $5,000” is monumentally different than “I will have $5,000 by Dec. 31.”
What’s the purpose?
Recently I began describing what accomplishing a goal will allow me to do. For instance, “I will have $12,000 in my emergency fund by Dec. 31, and it will allow me to focus on saving for a down payment on a home, going forward.”
I highly recommend you adopt this add-on. It leads you to what’s next. There’s no resting on your laurels or keeping your future at bay. The time wasted between goals is very valuable time, ripe with momentum. Use it.
I’m pulling the trigger early this year. Primarily because something funny happened last year. Well, it wasn’t so much funny as it was an exercise in advanced face-palming. I had inadvertently forgotten to make a deposit. I don’t know if you’ve ever tried to make money immediately appear in an investment account at 5:15 p.m. on New Year’s Eve, but it’s impossible. And just like that, I was a liar in 2017.
That’s how effective goal-setting works. Your declaration either will be your reality on the predetermined date, or it won’t. There’s no kinda. There’s no sorta. And almost doesn’t matter. If you don’t know whether or not you accomplished a goal, you didn’t. This sentiment scares people away from goal-setting, but those frozen in fear will never experience the glory of consistently hitting well-structured and meaningful goals.
As you set goals for 2019 and beyond, force your own hand. Set up a scenario in which, in the end, you’re either a liar or you aren’t. It’s better than not knowing.
Peter Dunn is an author, speaker and radio host, and he has a free podcast: Million Dollar Plan. Have a question about money for Pete the Planner? Email him at AskPete@petetheplanner.com