It is a new year! And with the turning of the calendar to a fresh page, we all get the opportunity to ask ourselves “what am I going to do this year?”
New Year’s resolutions are a time-honored tradition – like paying for a three-month membership to a gym for a handful of treadmill sessions and trying to remember to cancel the subscription before it auto-renews.
I scoured the internet for statistics that might shed some light on the estimated percentage of success and failure of those who set New Year’s resolutions. After quite some time of falling short of what felt like legitimate numbers to post in an article, the answer to why I was unable to find this data became readily apparent because it illuminates the thesis of this writing – how can you measure something that isn’t specifically measurable?
Goal setting can seem intimidating, and without a repeatable process it can actually cause some to shy away from setting goals at all. Setting goals too easy to achieve can give us a false sense of accomplishment, and if those accomplishments don’t meaningfully impact what we want out of those goals the end result could be moot. Conversely setting too lofty of goals can quickly undermine themselves entirely, leaving us feeling rejected and set back. It is no wonder therefore that according to a CBS poll conducted just prior to the start of the new year, a majority of the sample size indicated that they would set no goals at all.
Of those that responded that they would indeed set goals, the percentage breakdown of “what they mostly would be about” is listed. Let’s examine a few of the examples:
I’ll admit that when I first started setting goals, many of my own resembled the ones above, and I always ran into the same problems in the next step of the process which was how do I come up with a plan to actually execute on these goals, if I can’t truly define what they are to begin with?
The phrase “SMART goals” is a double entendre – not only does the phrase connote what we want our goals to represent, but “SMART” is also an acronym that will help us easily discern our successes or failures.
Let’s revisit one of those goals from above and make it “SMART” – “Losing weight and improving health”. Focusing more on the weight-loss, say an individual is turning 50 in June – June 14th to be exact – and their spouse has planned a family vacation to celebrate. The trip is to a beach location where the couple honeymooned, and they want for one night to back and dine at the very first restaurant, and to capture this moment in time they wish to wear the same wardrobe as they did that very night. A perfect photograph opportunity that the family will cherish for years and generations to come.
A quick weight loss solution in January may not produce those results come June, and thus we must make it “SMART”. Try this instead: “My goal is to lose 15 pounds by June 10th, so that I am able to wear the same outfit I wore that night years ago.”
This statement is much different. It is specific – they have clearly defined what it is they want to do, and it is measurable – the scale will be able to show the results. It is also time based – “by June 10th”. Without greater context in my made-up scenario, the individual must be able to determine based on their fact own individual circumstances if it is achievable – but assuming that it is (based on the fact that at one point in time those pants fit just fine!), this goal is also relevant to the person. Now it is time to start working the plan – find a support system that can help you determine healthy food options throughout the whole period, commit to certain days of the week and times to get some physical exercise, check in on the progress periodically over defined periods and our hypothetical person is well on their way. Come June 10th, they know whether or not they have reached their goal.
At Wellspring, we sit down with our clients at the beginning of every year, and we help them set their own “SMART” goals. We ask a lot of questions, practice being good listeners, and once we hear and are able to repeat the sentiment of their aspirations we craft them into Specific, Measurable, Attainable, Relevant and Time based goals that help us determine the most efficient ways of helping them achieve those goals.
“I want to spend less money this year” transforms into “I would like to spend $200,000 less this year as a family”. We will examine their cash flow, identify areas in which there might be reduction based on actual spending data as well as reasonable expectations for percent reduction, and develop a budget that would achieve this end. We will then examine the data every quarter – measuring actual spending versus the budget – to make sure we are on track, making modifications to the plan as life changes.
“I want to give more to charity” transforms into “I would like to increase my charitable contributions by 10% over last year in the current year”. We will review the family’s charitable gifting summaries, identifying either specific organizations or causes which they might like to contribute, and perhaps we might even explore ways outside of simple cash gifts that would fit the family’s other financial objectives, such as contributions of appreciated securities to a Donor Advised fund to obtain both the charitable deduction for income tax purposes, as well as the forfeiture of paying capital gains on the sale of those assets. Or perhaps we might create and fund a Charitable Lead Annuity Trust (CLAT) – allowing for the charitable organizations to receive current cash flow, and thus achieving their goal of increased giving, while also providing for a current year charitable income tax deduction.
There is a multitude of financial techniques that our advisors and staff can recommend and implement to help our families achieve their goals, whatever those goals might be. But before we design, discuss, and execute these techniques for our families – it is important to make our goals “SMART”.