Why you should ignore your list of goals… sort of…
Personal finance bloggers have written ad nauseam about maintaining, updating, and achieving financial goals. I’m sure you’ve heard about how goals should follow the acronym “SMART” (Specific, Measurable, Attainable, Relevant, and Time-bound) , and how if you don’t set goals you really can’t expect to attain financial freedom. In fact, I think every personal finance blogger would agree with me that your financial list of goals is your most important weapon in achieving financial independence.
But I had an experience recently that led me to rethink this whole focus on goal-setting and how everyone has really seemed to have drunk the Kool-Aid when it comes to goal-setting. It really has become the “First Commandment” in personal finance. Today, I’m going to be questioning that commandment.
That’s right, you lucky bastards. No math today, no advice on how to pump up your investments with appropriate risk or how saving $5/day really doesn’t help THAT much. No, today’s topic is much softer and way less math-y.
A long time ago at a bar not so far away…
To say that my girlfriend and I struggle to stay motivated when it comes to working out would be a drastic understatement. It’s almost like saying, “Stephen Hawking is decent at math” or, “Mariah Carey has a good voice.” But one thing that we’ve been able to do pretty consistently is run a 5k race every week put on by a local bar. You go, you run, and at the end there’s cheap beer and cheaper tacos.
We simply can’t say no.
So after my girlfriend’s recent purchase of an iWatch, we went and did our run. For those of you that aren’t familiar with the racing lengths, a 5 kilometer race is roughly 3.1 miles long. Not a marathon, but an accomplishment when the most recent fitness goal you hit was when you DIDN’T eat 7 jelly-filled donuts…
So we started the race, and I said to myself, “My goal is to run the entire race without stopping.” I’m very proud to say that that’s exactly what I did. With a fair amount of cursing between desperate gasps of breath…
But as I finished, I realized I had taken quite a long time, and I was not happy with myself. However, once my girlfriend caught up, we looked down at her watch, and something amazing had happened…
I ran 3.75 miles. Not 3.1.
Now, the fact that I ran 20% farther than I was planning was really telling, and I was incredibly proud of myself. After all, 3 miles was an accomplishment, and I had just blown past that. Ok, well not “blown” past it, but I went a significant amount farther than I was planning. And that got me to thinking…
If I had known exactly how far I was going to run, would I have met my goal of running the entire distance?
probably definitely not.
So the cogs in my little brain started to turn…
Are your goals keeping you back?
I don’t think anyone would argue that having a solid financial list of goals is a good thing to have. After all, goals are needed to make sure you know where you’re going. They act as a solid roadmap. They help keep you on track and inform daily/weekly/monthly decisions when it comes to your money. Who doesn’t love goals?!
Exactly. EVERYONE LOVES GOALS!!!
But I couldn’t help but wonder if goals act as a way to hold people back. After all, if you had told me I was going to run closer to 4 miles than 3, I probably would have talked my exhausted self into taking a couple of walking breaks.
The applications abound even outside of fitness. Think about blogs, and how many people start a website in the hopes that they can monetize it one day. After all, the search “how much can you make from blogging” and its related searches in Google brings up a few hundred hits per month. Why would you ask, “how much can you make from blogging?” That question implies that there’s a limit to how much you can make. When really, when it comes to business, your goal is to make as much as possible, not hit some number and then hit cruise-control.
Don’t let your list of goals limit you…
I feel like everyone looks for that sort of limit, that sort of “market average” when it comes to money. Think about your salary for a minute. Sure, you should have a rough idea of how much someone in that position makes. But I routinely add $20,000 to what I think are reasonable salary expectations. Why?
…because how awesome is it going to be that day when someone says, “Yeah, sure, we’ll pay you that.” And If I hadn’t asked, I wouldn’t have gotten the number! If I had just set my goals nice and low, I wouldn’t have known what I’m really “worth”!
Here’s an interesting story about buying cars. A recent study has shown that most people don’t want the best price for a car. They just want to get the average price for a car. Meaning they’re ok with knowing that 50% of people got the car for cheaper, if they also know that 50% of people paid more than they paid. Again, why?
Because people have this terrible tendency to limit themselves with their goals.
But why set yourself up for that limit? After all, if you’re saying my goal is to make $50,000 a year blogging, then you’re probably not going to turn into a Pat Flynn or Ramit Sethi and make millions per year.
Why ignorance can be a powerful weapon…
Thank GOD I didn’t know how far I was actually running; I never would have gone that far if I did! And when it comes to your finances, I think a lot of good can come from this lesson.
For example, a huge part of dealing with finances is the psychology around money. And the best way to beat your own psychology is through automation. (quick side note: if you’re looking for an awesome resource on automating your finances, check out I Will Teach You To Be Rich by Ramit Sethi. Guy knows a thing or two about lazy finance…) So if you just set your goal of sending $100 a month to an investment account, and don’t even think about it (because it’s automated), you’ll be able to hit whatever your financial goal is. The best part? You won’t even realize you’re doing it.
If you really want to be boss, take it a step further: get someone you trust (significant other or family member) to log into your account and up the monthly withdrawal to be $200 a month. Tell them to do it sometime over the next 3 months, but not to tell you when exactly they do it. I’ll guarantee that you won’t even feel the effects, because you won’t even realize it’s happening. Like that time you had to get a shot and someone distracted you when the needle went in.
You’re much less likely to feel the pain (of needles or of financial cuts) if you’re not aware they’re happening.
Don’t obsess over your list of goals…
Your list of goals should be a guide, like a soft breeze guiding a boat or an oracle on the horizon telling you your future…
…it should NOT be a list that you spend hours poring over every day to make sure you’re on track.
It’s really easy to sit there and obsess over numbers and see if we’re on track. In fact, I’m super guilty of doing this. I obsess over how much engagement I get on Twitter, how many followers I have on Pinterest, and how many hits a day this website gets.
But here’s the rub: the more time you (or I) spend on making sure we’re hitting our goals, the less time we spend doing the things that actually drive us towards achieving them.
For example, maybe instead of hitting the refresh button 10 times a day to check my traffic like a lab rat hits a lever for food, I should spend that time making sure that all my articles are SEO optimized. Or make sure that my Pinterest page has super useful content. Or reaching out to the blogging community to network.
Instead I sit there and watch my traffic. Which is the one thing I could do that’s not going to actually increase my traffic.
And this can happen in finance, too. I used to check my Charles Schwab account DAILY. What a huge waste of time! It’s not like me checking it every day is going to have any sort of impact on the amount of money that pops up! I’ve since resorted to checking it a few times a month, and something magical has happened:
I’ve got more time back, and the amount in the account hasn’t dropped 90%! SHOCKER, RIGHT?! I KNOW!
Why you should ignore your list of goals – The Wrap Up
Ok, we all know that we need goals to help us achieve whatever it is we want to achieve: financial independence, 6-pack abs, world domination, etc. But when you’re writing out your goals, make sure you take the time and reflect on whether they’re helping you or hindering you. Remember:
- Don’t let your list of goals limit you – Just because you’ve hit your goals doesn’t mean that you should just stop there. Don’t settle for average performance and expect great results. If you want to be exceptional, set your expectations that high!
- Ignorance can be a powerful weapon – If you ignore your goals (to some extent) you might just find that you’ll surpass them… sometimes by as much as .65 miles. 🙂
- Don’t obsess over your goals – The more time you spend worrying about them, the less time you have to dedicate to activities that will help you achieve them. Boom.
Alright readers, your turn. Do you think goals are a sacred holy ground upon which only the Jesus figures and saints of personal finance may roam? Do you think I’ve committed some form of heresy by claiming that goals are not always beneficial? Are these allegorical metaphors doing it for you?
Keep trying to crack the code,