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.
This post makes complete sense! its true we sometimes mimic financial gurus but never really think deep enough to see if it will make us happy. Asking the right question to get to the root will definitely reinforce the goal and make it more realistic. Great post GE, thanks for sharing.
Totally agree. Asking “Why?” is crucial. There should be a meaningful purpose that motivates you to attain financial independence. Recently happened to read “Early Retirement Extreme” by Jacob Lund Fisker. He starts the book with a similar argument. Any chance this post was inspired by you reading that book ?
It was not. But Jacob and I have similar philosophies on many things.
Great idea! I always ask “why”, but I never thought of starting with “why” and working from that point instead. Love it!
“Better. Now you have multiple means to the end.”
I love this. Focusing on the why seems to make the how less daunting. Great article!
This is so true. Many times, we make such vague goals but SMART goals will get us there faster with concrete action steps.
Dude, awesome post. You’re absolutely right. We constantly copy others without really thinking about it. I think a lot of it has to do with the fact that we are a “need it now” society. We don’t want to wait for anything, so why bother asking why? Joe Schmoe says I can save money by doing this… I’ll just do that and get the same result, right? Wrong. We are all different people with different situations. Again, great article.
Some very important points here. We’re often so obsessed with creating goals, we don’t step back and ask why we want that specific goal. Goals need to be something you genuinely want – you’re more likely to actually stick to it then!
Yes! This all comes back to priorities and focus I think. It’s so easy to get lost in the process, and forget why we are doing things. Money is a means, it’s not the end game. Remembering the “why” is so important before you start to focus on the “how”.
Love it, great post!
Very, very, very good post. I will admit I am guilty of just trying to blindly follow finance gurus but nothing really took hold till I defined my reasoning. As you said, unless we have reason, success will be difficult to obtain if its not defined.
I’m not aware that a single word “why” can bring a huge impact with your finances. And your right without asking yourself this question, you can’t come up with any goals. I think this implies also to all aspects of our life.
Spot on sir!
My job is to do this with client companies.
This logic should be the cornerstone of all decision making processes. Cause and Effect.