Will financial planning work for me?: Do goals make sense? What if you do not have goals?

Goals are important, but not for the reason many people may think. Everyday habits and behavior will impact your outcomes, regardless of whether these habits align with your goals. So, do goals make sense? Yes, but only in that they help you to develop habits and assess your trajectory.

If you want to achieve a certain financial outcome (e.g., my business will generate $1M for my family by the time I am x years old), you can determine how much you need to save and what rate of investment return you will need to get there. However, substantially more powerful than setting that goal, is a habit, e.g., my business will generate distributions of $y the 1st week of every fiscal quarter that I can save/invest outside of my business. In real life, you may hit a rough patch and must reduce the amount or frequency of your savings. Or perhaps your investment portfolio will take a dip during a market correction. But are you still habitually making contributions so that you are heading in a trajectory that is toward your desired outcome? Are you becoming the type of person who behaves that way? Goals are important, but habits are significantly more influential on your outcome.

Important Action Item: Think about 1-3 financial goals you have. Next, think about the type of person who would achieve those goals. Lastly, think about how that person would behave on a daily, weekly, or monthly basis. This is the foundation to developing good habits that will increase the probability that you reach your desired outcome.