Brian Hufford, CPA, CFP®
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I have this love/hate relationship with goal setting that I have endured throughout my life. For some reason, it all came to a head recently in the form of two unrelated events.
The first event was a conversation I happened to overhear from a 63-year-old about life at 60. He said, “While many 60-year-olds look accomplished, what they don’t share with you is the fact that they are hollow inside.” This really surprised me, especially coming from a very accomplished man.
The other event was an advertisement by an insurance company about how to recapture passion for a successful retirement. The company’s conclusion was a unique process they had developed for “dream catching.” This process allows one to capture pictures on the web and save them in a picture gallery of dreams.
Samples might include a picture of the Eiffel Tower or a picture of a dream retirement home. Perhaps these two events best present the duality of emotional depression and the lost naïve optimism of our times that we endure by degrees.
Hope and confidence are critical human virtues. How does the exercise of setting financial goals promote hope and confidence? Is setting a goal like simply projecting a vivid dream in our mind? Do we meditate on colorful mind pictures of how life should look for us in the future, or is the real essence of goal setting more about our level of commitment to a future positive outcome and the quality and enlightenment of our daily striving toward achieving the goal? How are hope and confidence supported?
The best definition of hope I have heard came from Dr. Jim Pride. He said, “Hope is the vision of a positive outcome with a plan of action that I know I can achieve.”
What I learned from Jim was that his accomplishments were driven by the great energy in his daily striving to overcome problems. He seemed to get that energy for daily striving from his commitment to a compelling vision of the future. He would attack a problem until it surrendered.
Jim always worked out his visions with a five-year cash flow plan. He was very practical about the need for “numbers.” For him, the numbers seemed to be a present-world embodiment of his level of commitment to actually achieving a goal. Without the numbers, he seemed to feel he was simply daydreaming. His cash flow plans were always very detailed, and he followed them every year.
Large financial goals can terrorize us with a danger that Dan Sullivan calls “the gap.” In challenging economic times when we want to hold on to past financial successes, we can be paralyzed from falling into the Gap.
The Gap is the large space between how we think our financial lives should be compared to how they are. If my practice should be growing annually and my production is down by 15% this year, I can be paralyzed by the Gap.
Retaining the image of how my practice should be has a tendency to make me depressed and paralyzed. In this regard, simply dream catching a 15% production increase can be a barrier to achieving the goal.
The only way to climb out of the Gap is to get the help needed to create a compelling plan of action with detailed numbers that you believe are achievable. The focus should not become the Gap between where I should be and where I am, but where I was in the past and how far I have come. This is the right Gap to gain energy for arising each day and overcoming problems.
I happen to believe that our level of commitment to overcoming problems with goal setting is determined by having detailed plans in writing. With a retirement goal, running a simple retirement calculation has a tendency to put one in the Gap. Likewise, merely ignoring the truth about where I currently am is just denial. This can lead to failure.
The right goal setting is being concerned with enlightened problem resolution. It starts with a realistic vision of current circumstances and evolves into the detailed planning necessary to force the problem to surrender.
It may include detailed cash flow planning, sophisticated tax and retirement planning, along with dealing with the random variables of investment return, risk, and inflation.
I have to conclude that goal setting is about gaining hope and confidence with a compelling vision of the future. Falling into the Gap can paralyze us. Our confidence will be determined by how committed and enlightened we are in daily problem solving. We need goals that we can believe in.
Brian Hufford, CPA, CFP®, is CEO of Hufford Financial Advisors, LLC, an independent, fee-only planning firm that helps dentists achieve financial peace of mind. Contact Hufford at (888) 470-3064 or [email protected].