Goal setting is the cornerstone of The Eqeus Way. Almost half a century of research into goal setting has provided volumes of support for the importance of goal setting in achieving what is most important to you, either in the workplace or in broader life. Simply put, without good goal setting, financial planning can be technically brilliant but ultimately meaningless.
Why Have Goals?
Intuitively, it makes a lot of sense that by consciously deciding what we want and then implementing strategies to achieve it, we are more likely to get where we want to go rather than ending up ‘somewhere’. The research tends to back this up, but with a few important caveats.
Having a small number of well-defined and meaningful goals provides the structure to make good decisions that leads to the life you want to live. Aligning these goals with your most important values is the secret sauce that provides the commitment to stay motivated and lead a happy, prosperous and meaningful life.
The literature points to four important mechanisms by which goals help achieve performance. Firstly, goals provide a direction so that effort is focused towards the things that are identified as important and away from activities that are irrelevant to achieving the goals.
Secondly, having clear goals provides motivation and inspires effort. The more important a goal is, the more effort it inspires.
Thirdly, people with clearly defined goals are more persistent at tasks related to those goals and exhibit more ‘grit’. With clear and important goals to work towards, obstacles are more likely to be tackled and overcome.
Lastly, and most interestingly, there is an important, indirect effect of having goals. With a firm goal in mind, information, people, plans and skills seem to ‘magically’ appear to help in the achievement of the goal. This isn’t some cosmic secret of thinking manifesting itself in reality, but is simply the brain being focused on the things that will help achieve the goal. We are all bombarded with stimulus every day and having a clear objective in mind allows the filter that we use to keep the inflow manageable ‘tune in’ to what we need to achieve our goals.
What do you value?
Making sure you have the right goals is key to this process. The right goals ensures you end up where you really want to be, but the level of commitment to goals is also the strongest indicator of performance.
In order to frame goals that you are truly committed to requires stepping back and exploring the subject of values – what is truly important in your life? To make this process less overwhelming, values can be considered across different areas of life:
Continuing to ask ‘why?’ will dig deeper into each of these areas, moving beyond the superficial and helping to uncover the underlying motivations for your behaviours. Undertaking an exercise like this it is crucial to having an understanding that there are no ‘good’ or ‘bad’ values – just the right values for you. Doing this exercise with a trusted person can also help push you that extra step to go a little bit deeper. If you get really stuck, a collection of common values on cards or similar can be used to stimulate your thinking and help you rank values that are or are not important to you.
Getting clear on goals
Clear values are great – and articulating them immediately puts you in elite company – but tangible goals are how these values are lived in the real world. A brainstorming session starts the process of getting all of your hopes, dreams and aspirations out in one place. Not limiting yourself at this stage will provide the best raw material for the refinement process that follows. Every idea is a good idea, whether it seems mundane (‘eat more vegetables’) or way out there (‘travel to every country on Earth’) there is absolutely no ‘wrong’ goal – you want what you want and no further explanation is necessary at this stage.
Having a plethora of goals is overwhelming and can be about as helpful as having no goals at all. Trying to aim for 30 different goals is not only unproductive, it is actually counterproductive since not achieving any of the goals has a serious demotivating effect. The process of refining goals down to 3-4 ‘signature’ goals that can be expressed in the SMART framework narrows the focus to a few really important goals. The achievement of these makes all the other goals either achieved by default, easier to achieve or irrelevant (eg. a goal to cut expenses can be made irrelevant by the goal of increasing income).
The more specific a signature goal the better. Knowing exactly what you are trying to achieve is both more motivating and eventually more satisfying than a loosely defined objective. When asked to ‘do their best’ rather than a specific outcome, people did not do their best simply because there is no objective standard of ‘doing your best’.
Peter Drucker famously quoted ‘What gets measured gets managed’. To be motivating, a goal has to be measurable in some way. This is simple for goals that can be expressed in terms of money or another quantity, but can be achieved for any goal by defining it in the right way. Having some unit of measurement not only allows you to know when you have achieved the goal, but also tracks progress along the way so you know if you are ahead of or behind schedule.
Goals have to be grounded in some level of realism. It’s great to dream big and we actively encourage this, but signature goals need to be within the realms of possibility. This takes two forms, firstly it must be a goal over which you have control. There is no point setting a goal over which you have no control – how will you take actions to get there? Secondly, the goal has to be achievable enough that deep down inside it feels like you can actually get there – a big, hairy, audacious goal is a great concept, but to be successful, setting an intermediate goal that you truly believe in may be a better strategy.
Remember when I said there was no wrong goal earlier? Well this changes now. Miswanting is a well-documented phenomenon where a lot of unhappiness is caused, not by missing out on what we want, but getting what we want and still feel unsatisfied because we don’t want what we like!
Having clearly articulated the values that are most important to us helps to guard against miswanting. Making sure that the signature goals can be directly linked to the values ensures that the goals are not only what we want, but also what we like and value. Too often people set goals based on what they ‘should’ do rather than what will really make them happy. They achieve those goals but don’t feel satisfied.
‘A goal is a dream with a deadline’. Much like the measurement aspect, knowing when you want to achieve a goal by makes it real. A deadline gives you a clear cut, black and white date to achieve your goals by and can help procrastinators (like me) actually make progress rather than putting it off until tomorrow, again.
What can go wrong
There are some important caveats to the goal setting process. Miswanting has large implications for goals and must be guarded against. There is also substantial literature that goal setting can actually backfire and make you less motivated to achieve your goal! Telling someone about your goal has been a traditional accountability mechanism – not wanting to fail – but this research shows that telling someone about your goal gives you a mini-hit of the same brain chemicals that are released when you achieve a goal.
This is important to acknowledge, but we believe that understanding this concept can allow us to take advantage of it. Firstly, we can use this mini-hit to get started, take the first step and commit to something that often takes a bit of courage. Secondly, the person you tell is critically important. Telling a stranger you meet at an event that you are going to run a marathon gives you the mini-hit but with no consequences if you don’t follow through. Telling your partner, a close friend or a coach who will be there to hold you accountable to taking the actions is a very different and much more motivating proposition!
Another criticism of goal setting comes from the field of mindfulness and focuses on the reality that we live in the present moment. The mindfulness school of thought advocates throwing out goals in favour of building good habits and letting the future take care of itself. There are some good points to take from this – the future is unknown and unknowable and despite our best intentions we may fail at achieving our goals. As we can only act in the present, taking the right actions and building the right habits is important, but the goal setting process can help us select the right actions and the right habits.
This goal setting process is the fundamental underpinning of The Eqeus Way. With a limited number of signature goals that are Specific, Measurable, Attainable, Relevant and Time bound, plans can be made and implemented to achieve these goals. Most importantly, you will have the motivation to commit to the actions that are required to make the life you want to live today and tomorrow a reality. Contact the Eqeus (link to Contact Us) team today to learn more about financial goal setting and how they can be achieved.
Much of the material for this post was drawn from Locke, Edwin A and Latham, Gary P, 2002 ‘Building a Practically Useful Theory of Goal Setting and Task Motivation: A 35 Year Odyssey’, American Psychologist Vol 57, No 9 pp 705-717