There are an endless variety of financial goals that you can set out to achieve.
Some can be very short term, i.e. “I’m not going to spend a dollar today.”
Some can take a little more planning and effort, i.e. “I want to pay off my $10,000 credit card debt by this time next year.”
And some can take decades of work and dedication, i.e. “I want to reach financial independence with $2 million in assets by 2040.”
To put forth such goals and set out to achieve them is more often good than bad. We are all bound to fail, but nothing ventured, nothing gained (dumb luck excluded), right?
When real-life flesh and blood human-beings find out that I blog about personal finance, the conversation eventually turns to a financial goal or recently achieved financial goal that is on that person’s mind:
“I started a Roth IRA this year.”
“I just started saving up for a down payment on my first house.”
“I want to finish paying off my student loans this year.”
“I just bought my first investment property.”
Again, goals are usually good, but it often feels like many put the cart before the horse. And I am always left wondering one thing: why?
I think this is an all too increasingly common practice in our modern culture. We hear that something is beneficial, so we want to go out and mimic it, without much thought as to why. Or, at best, the why is a secondary consideration. Is this a result of being bombarded with meaningless advertising? Lack of time for deep thought? Instant gratification and short attention spans that comes from technology? All of the above and more? Your guess is as good as mine.
The biggest downside to a missing “why”, is it leaves very little internal motivation to see our goal through to completion. We are going to run into challenges, and if we don’t, the goal was probably too easy to begin with. In those challenging times, the “why” is what is going to keep us motivated, help us dig deep down, and push us to reach new heights. It helps us refocus.
If you can’t answer “why”, then maybe the goal is not worthy of your efforts to achieve it at that moment.
Another huge benefit to starting with “why” is the satisfaction one can gain once the goal is achieved. Without it, success can seem hollow. “OK, no more student loans. Great… now what?”
Many financial goals require a series of why’s to get to the core of why that goal is meaningful:
“I want to cut my expenses so that I can save more?”
“So I can pay off my remaining mortgage balance.”
“To cut my living expenses even further.”
“Because I want to be able to work fewer hours in order to spend more time with my kids.”
“Because that makes them and me happy.”
But when you start with the “why” and end with the financial goal, it is even more meaningful and works even better.
“I want a happy family?”
What makes your family happier?
“When we get to spend more time together.”
How could you spend more time together?
“If I worked fewer hours.”
How could you work fewer hours?
“By limiting my expenses.”
How could you limit your expenses?
“By paying off my mortgage, eliminating one of our cars, and cutting grocery expenses.”
Better. Now you have multiple means to the end.
Without a meaningful “why”, financial goals are really just efforts to accumulate more money and/or more stuff. And if the answer to “why” ends at more money and more stuff, you will ultimately be left empty and dissatisfied.