Goals, Habits, Measure
When I meet clients for the wrap up meeting after completing their initial financial plan, I remind them that the three things they need to keep in mind are 1) focus on their goals, 2) create or maintain habits to save, and eliminate/preclude debt and 3) measure how they are doing.
I call that the keys to success. It’s not just financial success. Focus on goals, habits and measurement expands to other facets of people’s lives. In my case, it’s about health. I have a physical and weight goal, I have habit of utilizing a gym membership as often as four times a week, and personal trainer who weighs and measures me besides providing motivation.
Financial goals are pretty consistent:
- Financial Independence (or retirement)
are the most typical goal elements we see.
Financial habits include:
- Control spending, by introducing mechanisms that involve research, delay, second opinion, challenge of “do I need this?” questioning and review of purchases and subscriptions on a periodic basis
- Working down debt as soon as practical in coordination with saving
- Saving 20% of income or increasing saving to achieve 20% over some period of time
- Getting regular financial check-ups just as you should get health check-ups for prevention or early diagnosis and treatment
Financial measurement includes:
- Account totals (net worth of assets minus liabilities)
- Account elements as it pertains to risk (asset allocation)
- Goal cost increases/decreases/eliminations/additions
That’s it folks. It looks simple, but guess what, life gets in the way. Just remember every day to focus on goals, habits and measurement. It works well for finances and other areas of your life.