The Truth About Goal Setting



Two-and-a-half months have passed, and how many of us have faltered with our New Year’s resolution? I’ll be the first to plead guilty. At least when it comes to health and fitness, I already failed several days into the year. It’s not for the lack of trying. A big part of me really wants to lose weight. I even bought a bike not too long ago, hoping it would reinvigorate me to exercise. Still, nothing happened. The problem lies with the framing of my goal. It’s too vague. My goal is to just “reduce weight”. It’s the same case as a lot of financial goals I have heard. It’s not just about setting goals. It’s about how you set them and the action plans that go with it.

The end-goal needs have more precision and deadline

One goal doomed to fail is: “I want to save money.”

Not only is this goal too vague, it has no deadline. Next year? The year after? Five years later? You need to be precise on how much it is you want to save up. You also need to understand when you would want that to happen. In 2006, when I first started in the financial industry, my goal was to be a millionaire five years after. I had something specific: P1,000,000; and a deadline: five years later.

A better and enhance goal would be: I want to save up P100,000 by the end of 2017. You’re clear on the amount, and you’re bounded by a deadline.

Develop process goals

Now that your goal is specific and bounded by time, another way of working toward the goal is to develop some actionable plans which are called process goals. Think of the process goals as steps that you need to climb into order to get to the top. The thing about process goals is that you have full control over them; whereas, with your end goal, there is a probability of it getting derailed. So let’s say you wanted to save P100,000 in the next 12 months, this is how your process goals would look like:

Process goal 1: Auto-debit P4,000 from payroll account to a separate savings account or an investment account. The good thing about automating your savings is that it’s hassle-free on your end. It’s “out of sight, out of mind”. When you can’t see the money, you won’t be tempted to spend it. P4,000 x 12 months is P48,000.

Process goal 2: Render a service that can earn additional P2,000 a month. There might be a skill that you can monetize and help bring you closer to your end goal. Whatever it is, that is an additional P24,000.

Process goal 3: Decrease expenses by P500 a month. This could be coming from one or several expenses lumped together. For example, you spend P500 for every night out and you decide to skip one every month. So instead of the usual four, you decide to go out just thrice a month. This helps you save P500 every month. P500 x 12 is P6,000.

Process goal 4: Raise the remaining P22,000 from sale of personal items. There must be some unwanted and rarely use things gathering dusts in your home. You could liquidate those and add the cash to your goal.

Make the goal exciting and rewarding

We all have heard the ageless advice that a goal should be SMART. But let’s bring it to a whole new level. Let’s make our goals SMART-ER; E for exciting and R for rewarding.

Whatever the goal is, it should be something that motivates you enough to move you to work so hard to achieve it.  Hence, a goal should also be exciting. You want to save that P100,000 because you want to use it to travel as a family to some dream destination. It’s also rewarding because you know well that your family would appreciate it very much. It represents the sacrifices you endured. Furthermore, this goal should be so fulfilling you are raring to get back to work to experience the same pleasure in the near future. Hence, a rewarding goal motivates you to even work harder.

There are still more than nine months left for the year. The next time you set out to achieve some financial goals, remember these principles. Pretty soon, you are on your way to achieving them one after another.


kendrick-chuaKendrick Chua is a Registered Financial Planner of RFP Philippines. To learn more about financial planning, attend the 61st RFP program this April. To inquire, e-mail or text <name><e-mail> <RFP> at 0917-9689774.


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