Morningstars Samantha Lamas and Ryan Murphy
What is your best financial goal?
If your goals are difficult to fix, or seem drifting, you are not alone.
Research suggests that even when important goals are taken into consideration, people tend to answer with things that may not always reflect true goals.
It is helpful to implement ready-made processes that help us to better understand our deeper motivations, not strangers to ourselves.
Three key steps to a better goal
We used the survey to inform you of a three-stage process that will help investors identify financial goals more strategically. This process forces investors to slow down and consider the topic in general.
In reality, it provides space and structures where people benefit from, as they think deeply about what they want to do in the long term with their hard-earned resources. This is the appearance of the step.
Step 1: Slow down
First, take out your notepad and write down your top three investment goals.
Think of this as a brainstorming session. This helps to roll things up. But remember that it is just the first step and what is written here should be considered “written in a pencil.”
Step 2: Use the process
Next, set your notepad aside and check out the established list of common investment goals. Consider each alternative and mark the list goals that are important to you. When you move along, erase any goals that do not resonate with you.
There’s nothing magical about this master list. The advantage is that it gives people a different perspective on what they might motivate them, and also gives them the opportunity to evaluate options rather than having to generate ideas and evaluate them at the same time. It’s difficult to do two things at the same time (think about trying to drive and read text messages at the same time).
Step 3: Think carefully
Next, consider your top three investment goals, taking into account both the initial list from Notpad and the marked list of common goals. Write them down on a new piece of paper. Has the list of top goals changed since step 1? If so, what do you think?
A simple but effective approach: create a master list
If your goals change, you are not alone. Our study found that after going through this simple three-stage process, about 70% of people changed at least one of the top three goals.
After considering the master checklist, some of the first people who came up with goals in broad, vague terms began to develop more concrete and vivid ideas. The masterlist also states that many respondents only have financial outcomes (individual and potentially unmotivated) to reconstruct their goals from the perspective of emotional and personal values. It helped me move from my focused initial goals. This process helped them to better understand their reasons (not just theirs).
I’ll summarize
Next time you face the big scary questions about financial planning – “What are your comprehensive, 30-year long-term financial goals?” – Use the steps above to help you make decisions and break down the problem Try managing steps. It will help you ensure that you find not only the best in your mind, but you also find your true goals. This helps investors identify why they are not strangers to themselves and move towards where they want to go.
This article was provided to the Associated Press by Morningstar. For more personal financial content, visit https://www.morningstar.com/personal-finance
Samantha Lamas is a Morningstar behavioral insight researcher. Ryan Murphy is the world director of Morningstar’s behavioral insights.
