One of the best illustrated instances of indecision occurs in the story of Alice in Wonderland in which Alice comes to a fork in the road and must choose a path to continue her journey. She seeks the advice of a grinning Cheshire cat which appears out of nowhere. “Where are you headed?”  the cat asks Alice, to which she replied, “I don’t know.” “Well,” the cat smugly responds, “then it really doesn’t matter.” 

With no clear destination or goals, it’s impossible to make decisions with any degree of clarity and any path we choose will be paved with uncertainty. Setting well-defined financial goals based on a clear vision of what you aim to achieve, and a time horizon for achieving it, is essential if you ever expect to get where you want to go.

Equally important, goals tell you where you are. One of the reasons people falter in their financial pursuits is they can’t see their progress and they quit in discouragement. Goals can be broken down into checkpoints or benchmarks that enable you to see if you are on track.

Most importantly, clearly defined goals will help you clarify your choices. If a road won’t take you to your destination, you don’t take it. Your choices become clear, your decisions and actions have purpose, and your results bring more satisfaction.

While goal setting may seem simple, few do it regularly. Sixty-four percent of Americans say they are worried about not having enough money for retirement but only a third engage in disciplined planning for their financial future. What gives?  

People have a bias toward inertia.

For example, in Germany, about 12% of the population donates organs to help save lives, compared to 99% in neighboring Austria. The huge disparity isn’t related to differing views on the merits of donating. Rather, it’s all about whether participants must check a box on a DMV form. In Germany, people are asked to opt into the program by checking a box. Conversely, in Austria, participants must check a box to opt out.

That simple difference made all the difference!

Although it’s easier to accept status quo, and avoid decisions or commitments, as Mark Twain said, “The secret of getting ahead is getting started.” Here are some steps to help you jumpstart your progress in setting goals:

1. Inventory your needs and wants. Brainstorm on a sheet of paper everything you need and want to do financially. List your needs (must haves) and wants (like to have) separately.
2. Determine time horizon. Separate your priorities into short-term and long-term goals. Assign a specific time frame to each. Short-term = 1 to 5 years; Intermediate-term = 5 to 10 years; Long-term = 10+ years.
3. Prioritize. Go through your list and assign a numerical rating with “1” being most important.  On a separate sheet, write down your top three needs, followed by you top three wants. Needs should always take precedence over wants. Reprioritize based on time horizons (i.e. Important short-term goals should take priority over long-term goals).
4. Determine the cost. Estimate how much it will cost if you had to pay for the goal today. You will need to calculate the monthly savings requirement for each goal.
5. Visualize the outcome. Beginning with your top priority, take moment to visualize the goal as if you have already achieved it. Note how it makes you feel.  The stronger the emotion you have about a goal, the more likely it is you will achieve it.  This exercise helps prioritize goals. With money, what we’re really after are the feelings, emotions, and experiences we think it can create.
6. Establish milestones. Each goal should be chunked down into smaller goals with milestone dates. You will find that a goal is easier to pursue when you have smaller, more frequent targets to shoot for. Achieving short-term milestones produces more motivation.
7. Develop action plans. Create a separate action plan for each goal including specific steps, timing, milestones, and a tracking log.  Include any steps you will need to take to educate yourself on a type of savings or investment program.
8. Hold yourself accountable.  Share your goals and action plans with your spouse, a friend, or a trusted advisor. Ask them to check in with you periodically about your progress.

With clearly defined goals, you will not only have greater clarity in your financial decision-making, you will be able to develop targeted strategies for building and sustaining wealth. 

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by Silverlight Asset Management LLC to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Silverlight Asset Management LLC, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.

The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.