Last month, we kicked off the new year with a blog focused on making 2020 a year of intention, a year to focus your 20/20 vision on just one goal that you believe will create the biggest change in your life. But since it is February, the excitement about achieving your goal may have already been supplanted by that of the Super Bowl, Oscars, and election cycle. You have just over ten months left in the year, and we want to help you turn your wish for the year into reality.
We know that financial goals require a plan, of course, but they require another ingredient: intention. A financial plan, like most plans, starts with a clearly defined vision or outcome - for example, retiring at age 65. Many people share a similar goal, but without intention, that goal is not likely to become a reality. If we convert that vision into dollars (amass $2,000,000 so I can withdraw $80,000 per year in retirement), we still have just a daunting goal and no plan. But when we add intention, a true determination to act in a way that the retirement goal is achieved, it’s a little easier to get motivated to take the first step towards that goal. Let’s say I am 45, and my husband and I have $250,000 in retirement savings. We have a goal to retire in 20 years with $2,000,000 to use for income throughout our retirement. We are only contributing $1,000 per month because we have so many other demands on our monthly cash flow. We have figured out that we need to contribute $2,500 per month to achieve our goal.
Is it realistic to think we will go from $1,000 to $2,500 per month in contributions and sustain that level long-term?
A more viable plan is to set intentional actions toward a goal that we can achieve. Maybe we choose to do a budget sprint for January and figure out how much we can save by the end of the month. A budget sprint consists of setting a timeline (March) and setting a specific goal for your budget. The goal can be to eat all meals at home, to only spend $xxx on “fun”, to save as much as you spend, you get the idea. Each of us spends differently, so each person’s sprint would be unique to their spending habits. The idea is to reveal a place that you can redirect your money to a larger life goal - one that you are committed to achieving. We can then agree to an amount that we will pivot from mindless spending to intentional investing. If we can’t yet commit to the full $2,500 per month, we will stay focused on our long-term goal and our timeline ($2,000,000 in 20 years), and we can use that as our guide when we do have other funds available due to a raise or a bonus.
This concept of “pick just one” is exactly what we do with our financial planning clients. After we design their unique plan, we pick the issue that we all agree is the one that needs the most attention from us, and intention from our clients. Together we focus on that goal until either it is achieved, such as placing a life insurance policy, or until it is properly mapped out, such as growing a business for a future sale.
Let’s look at another example. Charitable donations are probably one of the most well-intentioned and least-planned financial goals for most families. From donating money at a luncheon, to answering a year-end plea from a nonprofit, or saying yes to your kids’ school fundraiser, most of us probably donate money but may not know what we are achieving with those dollars. An intentional approach is to pivot from spontaneously donating dollars (“we scrambled in December to donate about 10% of our income”) to define how you want those dollars to make a change in the world (“we donated 10% of our income to our donor-advised fund, which will only be used to grant money to nonprofits that strive for medical advances for children and have measurable outcomes to show their progress”).
Your one goal may be fairly expected - such as retirement or college planning - or totally unexpected - like selling your belongings and sailing around the world for a year. While life goals satisfy us on a universally human level, we should acknowledge that there is a money component that must be considered to achieve the goal. My dad used to end his weekly radio program by saying, “Wishing won’t do it. Investing will.” Hopefully this simple sage advice can inspire you to pick one wish you want to make reality this year and put a plan behind it.
Intention is the clear lesson I am learning from my New Year’s Eve ski accident. Every step is intentional to relearn how to walk properly, every minute spent doing rehab exercises has an intentional outcome to heal. Sometimes life presents you with the one singular goal you should concentrate on now, such as recovering from an injury. Sometimes life isn’t as clear in revealing where your focus should go. I encourage you to set aside time to think about the goals you need to achieve, and to join me in focusing your intention on the one goal that will make the biggest change in your life this year.
Ready to set your 20/20 vision? Here are some next steps:
Use our calculators to figure out how much you need to achieve your goal. Whether you need to know how much you need to save for retirement or how quickly your investments can grow, we have tools for you.
Send us an email at hello@bfsadvisorygroup.com with the one financial goal that you have picked to tackle this year, especially if you really do want to set your intention behind it but don’t know how to get started.
Debra Brennan Tagg is a CERTIFIED FINANCIAL PLANNER™ Professional and the creator of the DBT360 Financial Plan, a proprietary program that helps her clients prioritize their goals, leverage their resources, and address their risks. She is the president of BFS Advisory Group and teaches the public and the financial services industry about the importance of values-based financial planning and investor education.