Creating Financial Checkpoints: A Key to Helping You Reach Your Goals

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Many people learned at a young age about the importance of setting goals. You’ve probably heard it from your parents, teachers, and, these days, your financial advisor.

When you think about the financial future you want, it can be easy to come up with a big, ambitious goal right out of the gate.

On the one hand, it’s good to dream big. On the other, aggressive goals can be intimidating and become seemingly unattainable when you run into a temporary setback.

And that’s understandable. Many people tend to fixate on the end goal. When that seems out of reach, you might be tempted to abandon your goals altogether.

So what can you do to stay motivated and stay the course?

To attain any goal, whether it’s financial or not, you’ll need a series of checkpoints.

Big financial goals are rarely achieved overnight. By creating checkpoints along the way, you can work towards your goal systematically. It can help you track your progress and identify necessary course corrections. You certainly want to know as soon as possible if things aren’t going according to plan.

Here are some tips on how to create strategic checkpoints to help keep you moving towards your financial goals, big or small.

Setting up financial checkpoints for your goals

One key to achieving a large goal is to create smaller goals that can help you get to the finish line. These smaller goals are your checkpoints.

The idea of using checkpoints can be applied to almost any big or long-term goal– whether it’s wealth building or weight loss. You’re essentially breaking up your end goal into more manageable steps. It’s often simpler to work through smaller goals gradually over time, using them as stepping stones towards your larger goal (which could take years to achieve).

As financial advisors, we often see people, young and old, setting a large asset goal for the future, such as “I want to have $1 million when I’m 30” or â€śI want to a net worth of $10 million when I’m 60.”

No matter your age or the time span you have in mind, financial checkpoints can help you tackle your big goal in a more manageable way, track your progress, and keep you motivated to finish.

Now, you may be wondering what your specific checkpoints may look like. That depends on you, your goals, and your financial situation.

For instance, with wealth-building, you might want to consider setting up an emergency fund, creating a budget, saving for retirement, establishing an estate plan, etc. This is where bringing in a financial advisor may be helpful, as they can work with you to identify and establish the appropriate financial checkpoints for these goals.

No matter your financial goal, we recommend reviewing your finances and progress every January to see where you stand. Go ahead and add it to your calendars now as a reminder.

For shorter-term goals, consider setting up checkpoints every 90 days (or each quarter). For more aggressive goals, you can shorten the checkpoint periods – maybe every four weeks (or any interval that makes sense for you).

The importance of rewarding yourself when you reach a checkpoint

Rewarding yourself for your accomplishments along the way can be critical, because the feeling of success can help motivate you to keep going.

We often see this with wealth builders. They hit a net worth milestone and feel more motivated to create more wealth to reach their next goal. This idea also applies to debt reduction. When you pay off one loan, you become even more motivated to pay off the next loan.

We see this kind of motivation even in nature with a nest egg. (Yes, a literal nest egg.) A tactic that farmers have used to increase egg production is to place a real (sometimes ceramic egg) in a nest to encourage hens to lay more eggs. The idea is that by seeing the egg (the progress), the hens would be motivated to produce more eggs.

All this is to say: Feel free to celebrate the checkpoints or milestones as you reach them. Not only on your own – get your family and friends involved. A great way to stay motivated is to let those around you know what you’re up to and your progress.

Be kind to yourself

While financial checkpoints can help increase your likelihood of reaching your goals, they can also help reveal areas where you might be getting off track or not heading in the right direction. Remember, success isn’t always linear or guaranteed. So don’t be too hard on yourself if you run into a setback.

In life, things rarely go according to plan. When you get thrown curveballs, one way to cope is to focus on the goal you created and on the things you can actually control.

You may want to ask yourself: â€śDoes it make sense to change the goal or the timeline? Are there tradeoffs I need to consider?” Tradeoffs might include making adjustments like postponing a vacation in order to save more. Or working longer to give yourself more time to build up your retirement funds. You get the idea. Life is all about rolling with the punches and taking on each challenge as it comes. The ability to adapt and change is a learned skill.

Parting words

When we talk to our clients about the importance of setting up financial checkpoints, we often use this analogy: What if schools only issued a final grade and didn’t provide any report cards along the way? How well would you have done in school if you couldn’t track your progress throughout the school year? How do you know if you need to step it up, make changes and do better?

When it comes to your finances (and other goals), it can be difficult to achieve your big end goal if you don’t break it down into smaller, more attainable goals to mark your progress over time.

Think of financial checkpoints as critical stepping stones that can help you track your journey, make course corrections if necessary, and motivate you to stay on track. Clarity, confidence, and control – that’s what it’s all about.

This commentary contained herein is intended for informational purposes only and should not be construed as tax, legal or investment advice. Past performance is not indicative of future results. Clients should obtain their own tax, legal or investment advice based on their circumstances. The material is based on sources deemed reliable but is not guaranteed.

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