Financial planning is all about goals. Goal setting is one of the most essential parts of any plan, and I’m glad most of the advice industry has moved on from “your goal is to have a pension”.
You may want many things in this life—eradicating child suffering, England winning the World Cup, an Aston Martin DBX—but it’s probably not to have a pension!
A pension or any other savings vehicle can perhaps be the tool to help you achieve your goal, but it’s not the summit of the mountain. You may need a pension, but what you want is to live a life of comfort for the long term and not worry about getting into financial difficulties or living in despair.
Tax efficiency, compound interest, and inflation-beating returns are all things that can help us meet our lifestyle goals quicker, but they are the means to an end, not the end destination itself.
Financial planning is only one area where goals are essential. Career goals, lifestyle goals, and family goals are also common. Many areas of life have a focus on goal setting, and having goals can help us feel like we are working towards something meaningful.
But there’s always been something that makes me feel uneasy and anxious about goals.
I can set a goal, and it can be something I really want to do or achieve—learning a language or a musical instrument or completing a specific project—but as soon as I set it as a “goal” in my mind, it becomes a less appealing prospect.
Now that it’s a goal, I want to do everything but that thing! This is often why some people don’t want to monetise their hobbies. As soon as you attach the goal of earning money to a hobby, it becomes more of a chore than a pleasure.
The other problem I have with goals is that I feel so beholden to them that not accomplishing them makes me feel like a failure, when perhaps all that happened was adaptation and the realisation that I didn’t want to do that ‘thing’ after all. It’s important to remember that working out what you don’t want to do with your time is just as important as working out what you do!
If you have a long-term goal that you committed to – get that qualification, retire at 65, build a business worth £5 million—and all that entails, then once you’ve achieved it, it can feel like your life’s purpose and meaning are over (albeit perhaps temporarily).
In his book 4,000 Weeks, Oliver Burkeman describes seeing the Northern Lights. It was something he always wanted to do, but when he finally was able to see them, his thoughts were, “There they are.”
Not that they weren’t spectacular; they just didn’t provide the awe-inspiring, life-changing moment he had perhaps built them up to provide.
There’s a certain comedown after achieving a big goal—an unsatisfying outcome. I feel comfort in knowing there is a term for this, and it isn’t just me!
The empty feeling after achieving a goal is known as the “arrival fallacy”.
The arrival fallacy reflects the expectation that once you set a goal, you will reach it. Having this clear goal in your mind triggers the brain’s reward centres. The feeling continues to grow, and you become so used to it that achieving your goal is less satisfying than you thought it would be when you initially set it.
Psychologist Dr. Nikki Martinez describes how our brains cannot tell the difference between things we want and things we already have. When you make a goal concrete, it becomes a “real thing”. If your goal isn’t achieved, then the brain feels like it is losing something that we already own.
A similar concept I came across recently was “hedonistic adaptation”. You may want and strive for something, but once achieved, you quickly adapt to its place in your life, and the goalposts (pun intended) are shifted.
You may have dreamed of becoming a millionaire or having £1 million in savings. But once you get used to and acclimatised to this millionaire lifestyle, you quickly want to move on to the next thing—perhaps becoming a multi-millionaire or even a billionaire!
So what can be done about these frustrating side-effects to goal setting? Goals do serve a purpose. Getting things done is necessary and immensely useful, and it is good to keep your goals focused so you can ensure you do the things that are important to you and add value to your life.
Some tips for good lifestyle goal setting:
1. Habits rather than goals
The book Atomic Habits by James Clear outlines how building habits into our lives can be easier than setting big goals. It’s easier to set up healthy habits one at a time than to achieve the goal of losing and maintaining a specific amount of weight.
2. Keep things fluid and adaptable
Life happens, and things change both internally and externally. There’s nothing wrong with wanting something different at 55 than you did when you were 35. There’s no need to hold yourself to something if you’re not into it anymore or if something changes.
3. Know the reason for your goals and habits
Not having a clear idea of why you want to achieve the thing you want to accomplish in the first place can make it challenging to find the momentum to do the work needed to achieve the thing!
4. Set realistic goals with manageable steps
Unattainable and unrealistic goals will make you feel bad, which is undoubtedly the opposite intention of setting the goal in the first place. If you cannot visualise or state the steps needed to achieve your goal, then procrastination is going to creep in.
5. Don’t have too many at once
Try to keep the things you are trying to achieve to a minimum. One clear goal with defined steps and clear reasons why the goal is essential is better than trying to do too much at once.
6. Don’t have goals that conflict with each other
Perhaps you want to earn a certain amount each year, but you also want to be healthy. Having a stressful job that means you don’t make time for good eating habits and don’t sleep as much as you should, means your high-earning stressful job could conflict with your desire to stay well and away from a hospital bed.
Financial planning is so rewarding because, although people may have given a great deal of thought to what they want, how they want to live, and how they want to feel, they don’t know how to make that a reality.
As financial planners, we can help you put the tools in place to achieve goals and also explore what is most important. A feeling of satisfaction, contentment, and personal success is as essential as financial wealth.
So, what are your goals?
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