FINANCIAL ADVICE
Resolution Heat Check
FEBRUARY 16, 2022 | APTOS LIFE
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ow many of you when it comes to defining made a New Year’s financial goals. Instead of a vague resolution this resolution saying, “I’m going to year? I’m save more in 2022,” try guessing something like, “My probably around 50%. goal in 2022 is to be And as we near the end contributing 10% of my of February, how many of salary to my company’s you have already broken retirement plan by the your New Year’s Resolution end of the year. To get at least once? Polls and there, I’m going to start studies indicate that by contributing 4%, around 80% of people who and then increase my set New Year’s resolutions contribution by 2% each fail to keep them. That’s a Soren E. Croxall quarter until I reach high number, and I know Financial Advice 10%.” This is a clearly I’m personally guilty defined goal with a of failing to keep New deadline and a plan. Year’s resolutions. Why are we so bad at keeping them— Don’t Procrastinate or just goals in general? Below We often find it easier to just are few things to consider to help put something off for another increase your likelihood of setting a day versus trying to get started financial goal and sticking to it. today. One of the biggest reasons is what I discussed above: our Get Very Specific goals aren’t clearly defined. If Common New Year’s resolutions our goals aren’t clearly defined, tend to revolve around health then what exactly are we trying to and fitness. Here are two I’m sure accomplish today? Another reason you’re familiar with: “I’m going is we aren’t held accountable for to exercise more” and “I’m going working our way toward achieving try to be healthier.” Both are good our goals. Employing the help in theory. However, the chance of a friend or family member in of someone keeping these goals keeping you accountable toward are slim. Why? Because they are your goals can go a long way. super vague and unclear, so it’s You’ll want someone who is hard to know when you have going to be supportive, but not accomplished these goals. Let’s ultimately interested in hearing look at this alternative goal as an excuses time and time again. example: “My goal is to run in As a financial planner, I help a 10k that’s scheduled for April. clients take their financial goals To prepare, I’m going to join a from vague to clearly defined and running club that meets three measurable. My job is to listen to times a week and train with what you are trying to achieve and them.” You see the difference? help you create a plan to get there This goal is clearly defined, has given your individual circumstances. a deadline, and has plan to help My job is to also hold you you meet the goal along with accountable for making progress hopefully someone or something toward your goals. Through regular that keeps you accountable. meetings we continue to refine The same logic can be used and evaluate your goals. Most
A few things to consider to help increase your likelihood of setting a financial goal and sticking to it. people find that knowing that someone is going to be checking in on their progress is ultimately beneficial toward working to achieve their specific goals.
Don’t Get Discouraged Encountering a bump in the road or something unexpected that thwarts progress toward specific goals can be discouraging. All too often, people give up on a goal completely when this happens. Instead of giving up completely, take a step back and look to refine or redefine your goals accordingly. Take for example the goal of running in a 10k by April. Let’s say in March you accidently trip over a curb and sprain your ankle, which causes an interruption to your training schedule. You might be tempted to just toss out your goal completely and give up. Instead, you could refine your goal to state that after your foot heals, you’re going to continue to train and compete in a 5k instead of a 10k in April. It’s better to complete 50% of your goal vs. giving up completely, right? The same can be said for financial goals. Often financial goals are put on the backburner because people are afraid of failing to meet them. Even partially
achieving set goals is better than not trying at all. Let’s say you have a financial setback that causes you to not be able to increase your company retirement plan contributions by your planned 2% per quarter in the goal outlined above to get you to the 10% contribution rate by the end of the year. If you only increased it by 1% per quarter, you would still get to a 7% contribution rate by the end of the year. That is not a failure. You made progress and should be encouraged, not discouraged. New Year’s resolutions that relate to financial matters can be easy to put off. But resolving to target and track your progress can give you a feeling of achievement and be both financially and mentally rewarding. Soren Croxall, CFA, CFP® is a registered representative of LPL. Financial Securities and Advisory Services offered through LPL Financial, member FINRA/SIPC, a Registered Investment Advisor. LPL Financial and Croxall Capital Planning do not provide tax or legal advice. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
