Thanks for coming back to the Planning for Your Purpose blog! The purpose of the blog is to introduce financial planning concepts that I come across every day. I want to start discussions that will educate, benefit, and to help improve your financial life. Ultimately, to help you focus on your telos!
Goals, Priorities, and Values
Setting meaningful goals is one of the most important pieces of financial planning. It seems so obvious, but can be very difficult for many. I think there’s some uncertainty that folks don’t want to set goals that may not be achievable. I’ve also encountered insecurity about setting goals, sharing goals, or just putting values out there. I think some of that is cultural and some is just a lack of confidence. I hope going through this goal alignment exercise helps you be more confident in your goals.
Ultimately, this exercise is designed to help your dollars flow to the most efficient places for you from a budgetary standpoint. You may still need to do a financial plan, if you don’t already have one, to determine risk tolerance, asset location, tax location, etc. This exercise is meant to help decide at a high level where should the flow go and to help alleviate guilt that may come with some of your current spending.
I list this as goals, priorities, and values because they are separate ideas, but are all important in balancing your cash flow. A goal might be retiring early. A priority might be to stay physically healthy. A value might be to make environmentally friendly purchases. So, if you buy organic vegetables to help stay healthy and be more environmentally friendly, it contradicts with retiring early, because you may have been able to purchase non organic veggies in a plastic bag for less money and save that money for retirement.
You need balance and you need to know that it’s okay to have multiple priorities, values, and goals working at the same time.
First, list out any goals or priorities. These would include retirement, retire early, start a business, pay for college for your kids, vacations, be debt free, any goals that are important to you, you should write down. It’s okay if you have retire at 65 and retire at 55. You should also put goals and values that may be softer. Things like stay physically fit, being environmentally friendly, socially conscious, etc, these soft goals should be considered with more firm goals like early retirement or paying off debt. Later, you’ll be able to prioritize, adjust, add, or remove any goals. In the beginning, you want everything that is financially and personally important to you laid out; knowing you can always make changes later.
Second, organize them in order of most important to you to least. If you are working the exercise as a family, you and your other decision makers should do it separately. I recommend writing each one on a slip of paper, then you can easily reorder them until you figure out what should be number one and of course move those lower that are less important.
Third, this one can be a bit tricky and time consuming, but the best solution is to review your current spending against your goals. You need some sort of budget for this or you can do it as a gut check on your spending. Is drinking Starbucks coffee a top priority for you? Then why are you spending money there? Maybe it’s part of a lifestyle priority or a necessity to allow you to achieve other priorities. The goal is to identify spending that doesn’t align with your values and eliminate or reduce it to a level that makes sense within your beliefs.
Fourth, realign your spending. If you’re spending your money on things that aren’t important to your values, stop or reduce spending on those items. Once you’ve stopped spending on items of little or no importance to you, start putting it where it does align with your values. Maybe that’s saving for retirement. Maybe it’s paying down debt. This is the financial planning step, you need to know where you want to go and the financial plan is the map to help get you there.
It may be helpful when working your financial plan to separate your longer term goals and values, your values will influence your spending today and goals will influence your longer term savings allocation. While these will interact and impact each other, ideally they will work in conjunction with each other. If not, that’s where having organized them previously will be important.
From my earlier example, if one of your goals is to stay healthy, but you’re paying a lot in gym or club memberships, maybe find a cheaper alternative.
Five, reevaluate. Do you need to change your goals? Maybe you should adjust your goals, make them more realistic within your wants and needs, maybe you need to eliminate or add goals you hadn’t thought of. Do you need to change your spending? You should seriously consider these items and you may have to make tough decisions if you should change your goals or change your spending, but they should reconcile in the end. The goal of the exercise is to align your spending with your values.
Well, are your financial goals good? While a budget might not be needed for every family, it can be helpful to review your spending and saving in the context of your goals and values. I think that aligning these will give you more satisfaction from your purchases. The top goal of this exercise is to help you achieve your goals more quickly, since you can prioritize spending or saving to match the most important goals.
If you need help prioritizing, making your financial plan, or if you just have personal finance questions. . . a CERTIFIED FINANCIAL PLANNER™ designee can help.
As always, save early and save often. Having a current financial plan is a great way to know where you are financially compared to where you want to be. Some of your financial goals may be a long way off and some are likely coming soon. The earlier you start on the path of creating a financial plan, easier it is to make adjustments and create a realistic picture of your financial future.
Do you want help with your financial plan or in developing your goals? Call CERTIFIED FINANCIAL PLANNER™ professional Dennis LaVoy with Telos Financial at 734-468-3050 now to schedule a meeting online or at Telos’ main office in Plymouth, MI to review your financial situation and craft a custom financial plan for you. Dennis LaVoy CFP®, CLU® offers free consultations and would love the opportunity to meet with you and discuss this in more depth. Don’t forget to check my website and blog for more information as well as my youtube channel for videos.