We all know what a goal is, for example:

• Saving to go on vacation.
• Lose 10kg before the next vacation.
• Not losing any children while on vacation, unlike last time.

The first one is a financial goal, the second is personal and the third involves the police and social welfare. We intuitively know the first two are goals but do we really need to articulate an objective to avoid traumatize Johnny?

A Challenging Goal: Goals

Why Goal Setting is So Hard for Financial Literacy

Most financial literacy programs introduce the idea of goal setting, banter about the SMART concept and tell a struggling family to go forth and goal set. Unfortunately, the ability to set a goal, work toward it, adapt it and learn from the experience can be a cognitive and self-discipline challenge.

A family might want to buy a house in the future and go party this weekend. The impact of the immediate decision (a good time on Saturday) negates the good-goal-intentions of the future (using the down payment savings to pay off the credit card from the weekend). Thus, goal setting and personal choices are part of the same process. If a family member has impulse control challenges – AND controls the purse strings, then there are bigger problems.

Amazon and Past Trauma

Goal setting is not getting easier. Artificial intelligence algorithms induce us to buy based on recent internet search or browsing activities. These targeted ads are a siren call to live in the moment and abandon our goals.

Some members of our society also carry inter-generational trauma. For example, a family of Irish ancestry may point to their great-grandparents fleeing famine and forced displacement as the cause of their subsequent generational poverty [1]. It does not have to be systematic and social trauma that gets in the way of goal setting. An abusive or neglected childhood, a current dysfunctional family or current environmental/social upheaval can cause people/families to forgo goal setting for today’s immediate priorities. A child in such an environment is not responsible for the circumstances. Nevertheless, the child, as an adult, is responsible for their actions. This is expressed in the following financial literacy mantra:

You are not responsible for your circumstances growing up as a child or the things you cannot control; but you are accountable for your adult self and what your children learn.

Personal Accountability Ethos

One Family’s Goal is Another’s….:

Goal setting needs to consider a discussion of needs, wants and impulses. The definition of these terms in a financial literacy context typically is something like this [2]:

• NEED: Something that is essential to sustaining life as well as to provide safety, security, meeting legal obligations and providing future prospects for your family; e.g. rent, food, utilities, school fees, taxes, basic transportation.
• WANT: Something that is desirable, makes life worth living, and/or provides future benefits: mortgage payments, eating out, high-speed internet, private school, car payments.
• IMPULSE: A purchase or commitment made that may be either a need or a want but obtained without sufficient consideration as to its importance; e.g. buying expensive wine; signing up for a streaming service but not watching it; enrolling for a course but not having the time to attend, buying a Ferrari.

Needs and Wants are ends of a continuum with Impulses being any point along it. This continuum is also context sensitive. For a family with good income, savings and financial discipline – buying a case of expensive wine or eating out is an affordable Want or Impulse. The Ferrari would be out of reach for this family. The continuum and context are described this way by the Alberta Money Mentors program [3]:

We can justify anything as a need. Clearly define what makes a need and what makes a want. If you think you need something, ask yourself whether you really need it, or if it just makes life easier and more convenient. In your budget plan, first highlight the needs that must stay. Then, number the wants in order of importance to you. Often these are difficult choices.

Alberta Money Mentors

The Goal: Make Goal Setting More Successful

Goal setting can be a waste of time. A review of the literature and popular writings about the challenges to setting goals leads to the following common challenges [4]:

Does a Goal Smell So Sweet by Any Other Name (Terminology)?

With apologies to the Bard, terminology can get in the way of a good goal. Is it a goal, plan, strategic-plan, tactic or a simply activity? So how about we go with these terms [5]:

• Task: takes less than a day or perhaps a few days to complete.
• Activity: a task can be completed but an activity is typically ongoing for a period of time or a long duration (e.g. 3+ months). Tasks may turn into ongoing activities.
• Goal (noun): an envisioned end state that has sufficient details so as to know when that state has been achieved.
• Goal (verb): the process of identifying something you want to accomplish and establishing measurable objectives and timeframes to help you achieve it.
• Long-Term Plans: also, long-term goals or strategy, these objectives are more than a year in the future. They also have less details or certainty associated with them as compared to tasks or goals. There many be numerous intermediate Goals, Activities or Tasks to achieve a Long-Term Plan.

Too Big and Too Long of Duration

The point of the above definitions is to help a person or a family break a long-term plan into smaller and more manageable units that can be achieved. To start, goals should be achievable within days or a few weeks. Subsequent goals can have a longer time horizon – if the family has the maturity to think that far ahead. Ideally a goal should have about a 3-6-month duration. A long-term plan 6 or more months in duration.

Setting Too Many Goals.

Three is a good number of goals. This number can be remembered easily and there will not be too many supporting tasks or activities. Day to day life is too busy for more than 3!

“Yeah-But“, What About the Distractions

Distractions prevent you from focusing on what is important. Sometimes people will use a self-manufactured crisis to avoid working on goals. The “Yeah-But” problem is where a person manufactures a series of plausible excuses that prevent them from working on a goal. Sometimes called the “Yeah-But” problem: I can’t do X because of Y”. Yeah-But might be cured with the ‘Why-Not’ questions – and patience.

Until Things Change, They Stay the Same.

A variation of managing distractions, not allocating sufficient time to achieve a goal. Achieving a goal means accepting trade-offs. If you are spending your time on X, you don’t have time to do Y. Commitment is accepting the apparent loss of one for the gain of others. Changes in behaviour, circumstances or mindsets take time and patience. As well, often the result achieved will be less than what was hoped for… but much more than what a person had before starting on the effort to make a change. Learning from failure is part of change.

Measurement and Tracking.

The acronym SMART has been used and abused in the context of goal setting. The letters have different definitions but typically are assigned to ‘Specific, Measurable, Achievable, Realistic, and Time-Bound’. Each of these elements is a function of measurement. Tracking progress of Tasks and Activities toward a Goal is critical and is part of making a commitment.
Make Practicing Goal Setting a Goal. Setting and attaining goals is a process and like any process takes practice, knowledge and commitment.

SAMI & The Benefits of a Goal

A person without goals lives in the moment. While this can be wonderful while on vacation it makes saving to buy a house more challenging. In the next blog, I introduce the concept of SAMI or Simple, Attainable, Modifiable, and Internalized. A precursor to the SMART acronym, SAMI is a way to help families practice and improve upon goal setting.

Notes and References

1. There are of course more recent (and historic) traumas that could have been used. For example, the Residential School system in Canada. This example is too raw and current however for what I intend to be a more academic discussion. Rather than minimizing or ignoring these events, instead I am using examples of hope in which peoples who suffered (in this case, the Irish) were able to overcome the trauma with time.
2. From a variety of sources too numerous to mention and all nearly identical with some slight differences.
3. Money Mentors, Budget Bootcamp Program. Available via: Free Course: Budget Boot Camp | Money Mentors Alberta.
4. There are numerous sources on the challenges of setting and sticking to goals, for example; https://stunningmotivation.com/goal-setting-challenges/.
5. These terms are very much focused on an individual or a family. For a discussion on how these terms apply to a corporate planning context, see my blog: Time to Define Planning Times.