If you want to succeed with your Financial New Year’s Resolutions, you need more than just a Goal. Focus on the actions required to accomplish your goal. If your goal is to have $1 million in your 401(k) at retirement, what action does that require? At an 8% return, that works out to $1,100 a month for 25 years. $1,100 a month is feasible for many people. Does your company offer matching contributions? Even easier.
People succeed with their resolutions not simply by having a goal, but by sticking to a process. A goal without action is never achieved. Wealth, then, is a habit, not an event. So is your health, relationships, education, or career. The direction of your life is the sum of your daily habits.
No one knows this better than musicians. Dedicated practice, continual learning, and achieving long-term goals is what professionals do. The musician who won the big audition has been preparing everyday for 10 or 15 years for that audition. Why then do so many musicians fail to apply those same habits to the financial aspects of their life?
Taking action without a goal is like wandering aimlessly. Running faster doesn’t help if you don’t know your destination. You need precise goals and then know how to break those long-term objectives into short-term, repeatable steps.
Our financial planning process begins with a One-Page Plan. The plan contains only two things: Goals and Actions. That’s all you need to get started. Clear and simple.
People don’t achieve their New Year’s Resolutions because they don’t stick to their plan. It’s not that the goal went away. So, just because success is simple doesn’t mean it is easy. Change is always a challenge. A good financial mentor can help you define your goals, explain the actions you need to take, and provide expert coaching along the way. That’s what I learned from my music teachers, and that’s how our financial planning works, too.