When planning for a brighter financial future, it is important to understand the difference between setting goals and setting objectives.
Using the analogy of a road trip, a goal is the address of a final destination. Objectives, on the other hand, are specific and measurable milestones that must be achieved along the way. Like mile markers that must be passed and turns that have to be made to reach the goal.
Goals show you the direction of the final destination and the objectives tell you what steps to take to get there.
Goals without objectives can make the journey seem too massive to achieve. Objectives without goals can take you in the wrong direction.
Therefore, the key is to start with a financial goal to set your direction to your final destination. Then take steps to make sure your objectives get you there.
A way to describe a good objective is by using the popular SMART acronym, which stands for Specific, Measurable, Attainable, Realistic, and Timed.
- A GOAL – to have the financial resources to live a desirable lifestyle, so
- OBJECTIVE #1 – put a plan in place in case there ever is a need for extended health care.
- OBJECTIVE #2 – create a separate travel budget to enjoy during retirement.
- OBJECTIVE #3 – leave a legacy you can be proud of for the next generation.
It is important to make these objectives as detailed as possible to the specifics of your situation. It is not good enough to say that you want to pay off your debt. You must say “I will pay off my debt in the next two years.” From there you can set up a measurable and actionable plan to pay off that debt: “I will stop eating out and apply those savings towards my debt. I will pay off the highest interest debts first. When I have paid off debt A, I will apply that payment towards debt B.”
So write down your financial goals – and the objectives you plan to use to reach them. Writing down goals makes the idea more concrete and makes it more likely that you will actually achieve them. Furthermore, posting your goals in a place you’ll regularly see them, like your bathroom mirror, automobile dashboard, or refrigerator will help you stay focused on doing the work and making the sacrifices it takes to reach your financial goals.
By breaking your goals down into objectives and setting your objectives into action you can make sure you that you are on track to plan for a brighter financial future for yourself and the legacy you leave.
Hiram “Chip” Hutchinson, III, is the President of Hutchison Group, Inc. (HG), a fee-based, independent financial services firm assisting clients in and around Rock Hill, South Carolina. Chip drives strategies designed to better enrich the client’s experience, resulting in a deeper client relationship and a broader understanding of client financial needs. HG has been offering personal financial guidance for more than two decades. Learn more about them at hutchisongroup.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy assures success or protects against loss. Investing involves risk including loss of principal.