Here's why Financial Goals are (almost) pointless

By: Scott Sturgeon, JD, MBA, CFP®

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Over the last couple of decades, the financial services industry collectively decided that the biggest value add it could provide to the clientele it worked with was to help you “achieve your financial goals”. Turn on the TV, watch almost any commercial for a financial services company and it’s likely you’ll hear a lot about setting goals, working towards objectives, achieving goals, or some combination of the three.

There’s nothing wrong with setting financial goals and to suggest they’re completely pointless might be a bit of an over exaggeration. In taking a moment to question the concept of setting, working towards, and achieving goals however, it does beg the question of when the last time was you literally wrote down your own goal, worked towards it, and reached the metaphorical finish line of achieving that goal? Even if you did do all of those things, was it the setting of the goal itself and subsequently achieving it that made those two things possible? Or was it the time, sweat, hard work, and dedication it took that really made it possible to finally obtain something you’d wanted for a long time?

In James Clear’s book, Atomic Habits, he proposes the idea that while goals themselves are important, changing your identity is what can really create an impact your ability to become the person you want to be or achieve the things you want in life. He presents an example of someone trying to quit smoking. If that person is offered a cigarette, they might be apt to respond, “oh no thank you, I’m trying to quit.” In reality, their response should probably be something like, “no thank you, I don’t smoke.” The difference in those two statements is small, but in the latter, they’ve literally identified as a person who does not smoke, thereby embodying their ultimate objective of quitting smoking.

When it comes to your own personal financial planning, figuring out your income and expenses, investing money, or trying to save on taxes, your financial identity can play as much or more of an important role than “winging it” or simply saying you’d like to eventually get organized and find efficiencies in the aforementioned areas.

Financial Identity Defined

What exactly is your financial identity? Definitions abound, but one way to think about it are the habits and ways in which you interact with money for your own wellbeing. Maybe you’re a diligent saver, but get nervous when the stock market starts to go up or down. Perhaps you’re a patient investor, are a modest saver, but like to spend assertively when it comes to certain things like travel, entertainment, or supporting family.

Whatever your priorities are (and arguably what your financial goals may be) are going to inform your overall financial identity.

Building a Financial Identity

So how do you go about building a positive financial identity? A good first step is education and gaining a better understanding of your personal finances and what you’d like your personal finances to achieve for you. From there, it’s implementing methodologies of thinking that align with those objectives. Having an advisor to help with this process can provide a lot of value in ensuring you’re coming to the right conclusions and framing a good understanding around personal finance.

Ultimately, you’re trying to reframe the way you think about certain financial behaviors that actually work against you over time. For example, instead of thinking, “it would be nice to retire by the time I’m 65,” begin to frame your perspective to be something like, “I’ll be retired at 63, but if I want to work longer, I’ll have the flexibility to do so.” In doing so, you reframe your perspective to instead focus on the thing you’ll need to do to make retirement at 63 a reality.

If you’re someone who gets nervous when the stock market declines sharply, instead of panicking or looking to sell, what would an investor with a firm understanding of the stock market do?

So maybe in the end it isn’t such a bad idea to have financial goals. The ability to purchase big ticket items like buying a home, planning around retirement, or obtaining financial independence are all great goals that anyone can aspire to achieve. In creating those goals though, it can’t just stop there. It has to become who you are and influence the ways you behave and the decisions you make on a daily basis. Financial goals may not be pointless, but not having a financial plan and a financial identity to go with it, now that may just be the most pointless thing of all.

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