Shooting Down Goals

by Mike Holman

There seems to be a increase of goal-setting in the blogosphere recently. I think this is partly because we are approaching year end and a lot of people like to set goals for the next year. Patrick from CashMoneyLife even started a new carnival about financial goals. I think it’s a neat idea but I’m not really into setting short term financial goals and the long term ones don’t lend themselves all that well to carnivals if you want to enter more than once a decade. I did set a weight loss goal as part of Brip Brap’s public declaration challenge but other than that most of my goals are pretty long term and undefinable ie “save a lot”, “eventually pay off mortgage” etc.
I do have to take issue with some of the financial goals that I have read. In my opinion, a valid goal is when you set a target that you can measure and that you have a lot of control over the outcome. If your goal involves something that you don’t have any or much control over then I would call that more of a “wish” rather than a goal. For example saying that you want the weather to be nice tomorrow is a wish – not a goal.
One of my favourite bloggers, Canadian Dream likes to set goals and I decided to use his goals of examples of what I’m talking about – in no way am I trying to be critical of Tim because he’s a good guy and has a great blog however his goals from 2007 and 2008 provide perfect examples of what I’m talking about here.

Save $10k in 2007 - This is a perfectly valid goal because it’s almost entirely within Tim’s control as to whether he can achieve it or not (he did).

Investigate other streams of income – Another valid goal because again it’s success or failure is entirely determined by Tim.

Increase net worth by $30k in 2008 – The problem with this goal and one of the reasons I ignore net worth is that like a lot of us, a big chunk of Tim’s net worth is in his house. In his case he’s counting on about half of the net worth increase to come from events within his control (like contributions) however he’s also predicting a 4% increase in house value which will provide about 40% of this goal. I have no idea how the value of Tim’s house will change next year but what I do know is that Tim’s efforts won’t have much to do with it (unless he goes berserk and trashes the place :) ). Another part of the net worth increase is to come from investment return which again, is out of Tim’s hands in my opinion.

Conclusion

While I don’t think there is anything wrong with setting goals, I think you have to draw the line between “goal” and “wish”. I wouldn’t say that anyone should rewrite their goals because of this post but they should recognize that some of the goals are out of their control and shouldn’t take too much credit if they are achieved and at the same time, don’t get to down if they fall short.

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