Goals vs Resolutions
A new year signifies new beginnings and that means millions of resolutions. We are three weeks into 2021 and by the end of the month, 75% of those resolutions are going to be abandoned. By the end of the year, only 8% will have accomplished their New Year’s resolution. Did you know that there is a difference between a goal and a resolution though? These are words that are used interchangeably but they are very different.
A resolution is a firm decision to do or not to do something. A goal is the object of a person’s A resolution relies on your mind telling your body what you are going to do or not going to do and then having your body do it. Let’s say my New Year’s resolution is to stop eating junk food. Whenever I have a craving for junk food, I have to trust my body to listen to the thought that is telling me not to eat junk food. I’m relying on sheer will power. Does that sound like I will be able to keep this resolution for too long? I might last a week.
A goal is the object of a person’s ambition or effort. This means that you have a strong desire and determination to achieve this goal and you are going to work hard at it. You are going to take time out to think of how you might fall short up or be tempted and formulate a plan to counteract it. In order to progress in our financial journey we have to set goals along the way. Achieving a goal is motivating and keeps you reaching for the next goal.
Importance of Goals
Many people don’t understand the importance of having goals. They will make resolutions every year but set no goals. Going through life without goals can lead to nowhere at all or somewhere you don’t want to be. This is how I was living my life when it came to finances in my early twenties; I had no financial goals, very little financial education and my money was controlling all aspects of my life. I wasn’t thinking about the future and I was just spending money without thinking.
Having something that you are working for, keeps you focused. Have you ever had something you really wanted to attain and you reached that goal? Maybe it was getting a car, finishing college, losing weight, or getting a promotion. Whatever it was, do you remember how much effort you put into reaching that goal? If you were serious about this goal, you prioritized things so you would have the time and money to get what you wanted.
A few years ago, I was intentional about getting my Master’s degree. I had a lot of things going on in my life but I made time for college. There’s never going to be a perfect time for anything, life is going to continue to happen. I have every other Friday off and even though it would have been nice to sleep in or go have lunch with friends, I would drop off the kids at school and then go straight to Barnes and Nobles to do classwork; I would be there for eight hours making sure I was two weeks ahead in classwork. I prioritized my time and scheduled a set time each week to reach my goal.
Be S.M.A.R.T.
George T. Doran is credited with the goal acronym of S.M.A.R.T. (I am always amazed at how creative people can be.) The S.M.A.R.T. method will help you be methodical in obtaining your goals and will ensure that you have set goals that you can achieve.
S-Specific
One of the reasons people don’t achieve their goals is that they are too broad. “I want to get healthy” and “I want to fix my finances” are examples of goals that are too broad. Your mind is not able to break those goals down into things you can action and thus they seem unattainable and overwhelming. When someone’s goal is to “Fix their finances”, that could mean a variety of things such as create a budget, create an emergency fund, fix their credit or pay down debt.
Because this goal is so broad it’s going to be hard for this person to know where to start. They will start to feel overwhelmed because there is so many areas to “fixing their finances”. An example of a goal that is more specific is: I am going to save money.
Go ahead and write your goal down and determine if it’s too broad. If you told your goal to someone else, would they have a clear understanding of what you want to achieve? Take this time to rewrite your goal, making it as specific as you can.
M-Measurable
Having a goal that is measurable makes it feel attainable. If there is no way of measuring it, you will never be able to determine your progress or when you have reached your goal; you won’t know if there are any adjustments that need to be made along the way. In our goal of saving money, by adding a dollar amount, you make it measurable. “I am going to save $2,000”.
Is your goal quantifiable? If it isn’t, you will get discouraged when you feel like you aren’t making any progress because you have no “number” to reach for. Look at your goal again and see if it’s measurable. If it isn’t, your goal might not be specific enough or you need to identify a similar goal that can be measured.
A-Achievable
In order to be successful, your goal has to reachable because it’s realistic and attainable. I encourage big thinking but there are some goals that are unreachable; at least not at the moment. We all have limitations in resources: money, time and skill; and sometimes it comes down to plain physics. Think about what resources it will take to achieve your goal and determine if you have them or can get them.
A 5’2”, 130 lbs. high school kid with a goal of being a tight end in a Division 1 school has an unrealistic goal. I hate to be the one that breaks the news to him. The average stature for a college football TE is 6’4”, 241 lbs. If you are making unrealistic goals, you are setting yourself up for failure.
Take a look at your goal again. Is your goal achievable, realistic and attainable? If it isn’t, it doesn’t mean that you have to give up on that goal. It could mean though that you have to wait for some situations in your life to change for you to go back to that goal.
R-Relevent
The goals you set have to be meaningful to you. If they aren’t, you will most likely not achieve them especially if they require a lot of work and sacrifice. There is a difference between goals and requirements and they have to be approached differently. Some jobs require certifications or completing a course that is hard and intense.
For a person that loves their job, passing that course is meaningful. They are going to take pride in not only passing it but are going to try to excel. Although it’s a job requirement, it can also be considered a goal because it’s something that the employee wants to achieve not only for the job but for themselves as well.
Now let’s use the same scenario, but this employee is only at that job for the paycheck. In order to keep their job, they HAVE to pass that course. This person is only doing this course because they have to. For this employee, this is a requirement, not a goal.
Do you see how the difference in motivation changes it from a goal to a requirement? If it’s something that you have to do, whether it’s for a job, your parents or your partner, your mind will look at it as a requirement, unless it’s something you really want for yourself as well. It might still get done, but the approach, effort and final result will be different.
Therefore, examine your goals and decide if this is something YOU really want for yourself or is it for an external factor. If this “goal” has been set by someone else and it’s not something that you are passionate about, don’t classify it as a goal; categorize it as a requirement.
T-Time Bound
Lastly, your goal has to have a deadline. Everything around us comes with some sort of timeframe to keep us on track. When I was a recruiter, I knew at the beginning of the year how many people I had to bring into the military and I knew what my timeframe was; this allowed me to plan accordingly. Your goals can get lost in all the things that you have to do, but setting a target date will emphasize the importance of your goal.
Let’s put a deadline on the goal that we have been using as an example. “We want to save $2,000 a year from today.” This will allow us to make periodic checks to see if we are on track. You can check the balance every month to see if you are saving the monthly amount you set. You have broken your goal down into smaller, less daunting goals. There is something about putting a date on a goals that makes it more real and adds “good stress” so we can achieve our goals.
Be S.M.A.R.T. when creating your goals. Using the five factors: Specific, Measurable, Achievable, Relevant and Time-Bound will ensure that your goal is one that you can meet. You will still have to create a plan, but it will increase your chances of achieving it. Now that we have gone through the S.M.A.R.T. method, our final goal is, “To save $2,000, by January 2022 for a vacation to Europe.” This person has wanted to visit Europe for 5 years now so it’s a meaningful goal for them and it’s realistic because $166 per month is doable with some budgeting.
Write it Down
You need to write your goal down somewhere so you can see it on a daily basis. People who have their goals written down are 42% more likely to accomplish them. Writing it down, on an actual piece of paper, provides a visual you can see every day that will make you more mindful of the decisions you make that affect your goal and it stimulates an encoding process in your brain that causes you to analyze it. It’s not only a thought at that point but by writing it down your brain starts to process it and formulate plans to make it happen.Put it Into Action
This method for setting goals will be very helpful as we go through our financial journey. As you can see though, this method can be applied to any aspect of your life. As long as it meets all five factors, you should be able to achieve your goal.
Do you have a financial goal? It can be a short-term goal like “Not spend more than $100 on restaurants in the month of February”. Consistent small changes lead to bigger changes over time. Or maybe you have a long term goal like paying off your $1,200 credit card by November.
If you don’t have a financial goal, stop right now! Take out a piece of paper and write a S.M.A.R.T. goal. Look at it daily and make small decisions every day to get you to your goal. When you have achieved that goal, celebrate your accomplishment and then right away create another financial goal but don’t stop there… create a fitness goal, a career goal, a personal goal and a relationship goal.
My Goals
My financial goal is to reduce the amount of money we spend in takeout by 20% in the month of February. I will have to do a better job of planning out the meals for the week and not forgetting to take out the meat from the freezer each day. I’ll also share my fitness goal with you. I am still carrying some holiday weight along with some Corona weight and 2019 weight, so I want to lose 15lbs by my sister’s wedding in November; that’s 1.5lbs per month, very doable. Now that I have shared my goals with you let me know what some of your goals are. I would love to hear from you!
To Your Finances,
