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Millennials: Here's how to define your financial goals

October 21, 2019
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When you meet with a financial professional, chances are, the first question they will ask is: what are your financial goals?

As a matter of fact, type in “financial advisor in my area” into Google and visit the top 2 or 3 results. If I could place a bet, I’d be willing to place money on the fact that each of those websites say something about how that advisor can help you meet your financial goals.

Am I right?

Why do financial advisors talk so much about financial goals? Well, the answer is that establishing your goals provides direction and some context into your financial journey. Without goals, it is impossible to know whether you are on track with your financial progress. It can also set you up for frustration with your investment portfolio because you have no idea how aggressive you should be from the start.

But what if you just aren’t sure where to start with creating your goals? Here are a couple of places to start.

1) Learn yourself. What are you passionate about?

Have you ever bought a lottery ticket? I play the Powerball maybe once year, usually when it makes news for how big the jackpot is. Why do I do this? I know I have greater odds of being struck by lightning. To be perfectly honest, I don’t even buy the ticket to win. I know I’m not going to. I buy the ticket for the IDEA of winning (queue: “So you’re telling me there’s a chance!”). 

The idea of winning an absurd amount of money sends me into a euphoric daydream where I think about the possibility of waking up tomorrow morning with the potential to do anything I want to.

I think of what I will buy -- a house on the ocean, a jetski, a Tesla.

I think of where I will go -- a trip to Thailand and New Zealand.

I think of who I will help -- the homeless, those without access to clean water, my friends who are down on their luck.

I think of what I will do -- I could pay off debt, pay off my mortgage. I could retire and free up time to follow a passion of mine, playing music! I could take lessons and join a band. I could set money aside for my daughters’ future college education.

See what I just did with my lottery ticket daydreaming? I just created a list of what my passions are.

Now that you’ve identified your passions, now it is time to sort through them.

2) Sort through your dreams

Make two columns, short term goals and long term goals. Now go back to your list of passions and allocate each of those into long or short term. Long term is anything over 5 years. For example, that house you might want to buy on the ocean, could be a long term goal. The credit card you’ve been wanting to pay off could probably go in short term. Giving money to the homeless, or to agencies building wells in Africa could go in the short term goals.

3) Now that you’ve listed your dreams and prioritized, time to go over your budget.

It is time to visit (or revisit) your budget. What are you capable of rearranging in your monthly spending in order to make this possible. Do your passions align with your current discretionary spending? In other words, once you pay your monthly bills, what are you doing with the leftover money? If it doesn’t align with your short or long term goals, it is time to rethink your spending!

Goals-based spending -- we call it reaching for your Summit -- is not as complicated as some make it out to be. Start with the 3 simple steps, and consider having a spouse, friend or family member meet with you regularly to help keep you accountable to those goals. Good luck!