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Resetting Your Financial Goals for 2019

Summary

Learn to reset your financial goals in 2019 of the Science of Economic Freedom podcast. Doug Fabian, a financial advisor with Mercer Advisors, discusses topics like defining a vision for your financial planning future, setting concrete personal finance goals, such as fully funding your retirement accounts, guiding you to reboot your personal finances.

An opportunity to reset your financial goals in the new year is great, but how do you actually go about doing it correctly?

In “Time to Reset Your Financial Goals for 2019,” I provide you with some precise steps on how to do just that.

The process begins with defining a vision for your financial future. What do you want that future to look like? What do you not want that future to look like?

After defining a vision, you need to set concrete financial goals designed to help you make that vision a reality. Some of these personal finance goals are broad, and some are very specific, such as you want to hire a new financial advisor, or you want to pay off a specific debt.

The next step is to write down three specific financial goals that you want to achieve in 2019. Examples here could be to save 10% or more of what you earn, or to fully fund your retirement accounts, or to generate $50,000 in spendable income from your existing assets.

Finally, I show you how to “SMART” test your financial goals to see if they are Specific, Measurable, Attainable, Relevant and fit your Timeline.

If you’re looking to reboot your personal finances, this is the episode for you.

Topics included in this discussion:

  • How to reset your financial goals in 2019
  • Defining a vision of your financial future
  • Setting financial goals and writing down specific goals to achieve in 2019
  • How to “SMART” test your goals to see if they are Specific, Measurable, Attainable, Relevant and fit your Timeline
  • Examples of how to define, and then refine, specific goals
  • Action steps to get your financial house in order
  • Plus, much, much more…

Transcript:

Doug Fabian: Do you have clear financial goals for 2019? Do you know what areas of your financial life you need to work on? How do you go about setting realistic goals for the new year? All this and more on this episode of The Science of Economic Freedom.

Announcer: The Science of Economic Freedom is intended as an investor education resource. The views and opinions expressed on this program should not be construed as a recommendation to buy, sell, or hold any specific security. Consult your investment advisor and read any investment perspectives carefully before making any changes to your investment portfolio.

This program is sponsored by Mercer Advisors. Mercer Global Advisors Inc is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc is the parent company of Mercer Global Advisors Inc and is not involved with investment services.

 

Intro

Doug: Welcome to the Science of Economic Freedom. I’m your host, Doug Fabian. This podcast is all about helping you achieve your financial dreams. We call that economic freedom. This program is about your journey to achieve economic freedom for yourself and your loved ones. Today, we want to help you identify your next step on that journey. This is episode 42. It’s time to reset your financial goals for 2019.

 

What is economic freedom?

Before we get to the subject of the day, let’s refocus on the mission we are on. Now, what is economic freedom? Economic freedom is the day you go to work because you want to, not because you have to. Another way to say it – you have so much clarity and peace of mind about your financial future you no longer have to worry about money. One more way – you’ve accumulated enough assets that you can live off those assets and never have to worry about money again. Those statements represent economic freedom. The Science of Economic Freedom podcast and website have been built on the knowledge and values of Mercer Advisors.

Now, we are a wealth management company with over 30 years of experience assisting clients to achieve this goal of economic freedom. The Science of Economic Freedom is the collective knowledge of over 100 financial professionals using academically and scientifically validated formulas for success. We are experts in the field of finance, taxes, insurance, investments, asset protection, and estate law.

Now, the purpose of The Science of Economic Freedom is to leverage this collective knowledge and put this powerful resource to work for you. So, as I review the definition of economic freedom and the mission of The Science of Economic Freedom podcast, we can now move into 2019 re-centered on what we’re trying to accomplish. So, let’s start 2019. One of the great things about the annual calendar is you get to restart again. No matter what happened last year regarding your finances, you get a do over. You get to start again. We can fix mistakes.

 

We can embody new habits

We can go down a different path if necessary. Or we can keep doing the things that are working for us and keep going down that path. Now, most people don’t know where to begin. As I promised you last week, the first six episodes of The Science of Economic Freedom podcast this year will be dedicated and focused on your financial success in 2019.

Last week in episode 41, we talked about gathering your statements together and checking the scoreboard of the financial markets. This week, episode 42, is reset your financial goals. Next week, episode 43, is going to be the market outlook with Don Calcagni and looking at the financial markets for 2019. And then the week after that, we’re going to talk about cash flow with Kelly Palmer.

Now, in addition to these six podcasts to give you a quick start to a successful path in 2019, we have launched a new e-letter that we’re calling The Science of Economic Freedom Dispatch. And it is arriving in your email inbox every Saturday morning to give you news and insights on the markets, a previous of this week’s episode, of The Science of Economic Freedom podcast, and action steps to move you closer to your goals.

 

Who has achieved economic freedom?

Now, on last week’s show, I revisited the definition of economic freedom in terms of the number of Americans who have achieved it. And I don’t have an exact number, and I’m continuing to research this. But from the statistics that I have gathered, less than five percent of Americans achieve economic freedom. 95% of Americans have worries and concerns about money. Now, what group do you want to be in? What is preventing you from achieving this goal? What should be your next step? That’s what this show is all about.

 

Resetting your financial goals

Now, with that introduction of what we’re doing at The Science of Economic Freedom website, and podcast, and a review of these kickoff to the new year, let’s get to the subject to the day – how to reset your financial goals in 2019.

 

Create your financial future

What is your objective? One of the great things about the definition of economic freedom is we all get to define it in our own world. One of the things that we want to do is look at this in a positive way. I believe most of you, and I’ll even say all of you, want to achieve economic freedom. Some of you are already there, so therefore you want to maintain it. But there is another way to get motivated.

 

Look at things in the negative sense

Let’s use a little fear to express where we don’t want to be. I don’t want to work when I am old to support myself. I don’t want to run out of money in my golden years. I don’t want to tell my children that they have to take out loans to go to college. A little bit of fear goes a long ways towards making the necessary changes in our lives.

So, you don’t have to be exact in your mission and vision of your financial future. You need to have a destination in mind on where you’re going. You want to build up your net worth. You want to build up your balance sheet.

 

What are your goal statements?

And I went through a number of goal statements to help you identify with some that may click in your situation. I want to save more money in 2019. I want to achieve a specific rate of return on my assets. I want to pay down my debts. I want to fully fund my emergency cash reserves savings account. I need a new accountant. I need an estate planner attorney. I need a bookkeeper for my business, an advisor, a coach. I need a plan. I don’t have a plan. I need a plan.

I need better cashflow management. I need to get on the same page with my spouse. I need to get my kids off the payroll. These are just some statements that will start to develop into goals for yourself. Step number three – let’s write down three goals right now.

Now, here again are some examples. I want to help you. I want things to spark. I want you to go, “Oh, yeah. That’s me.” I want to maximize my retirement accounts in 2019. I want to pay down some bad debt. That could be credit card debt. It could be a car loan. I want to save ten percent or more of what I make. I want to generate $50,000 of cashflow from my liquid assets. I want to pay less in taxes.

Now, again, one of the things that I’m recommending that you do is go out to The Science of Economic Freedom website and download our special report on goal setting. It will take you through a step by step process.

And my encouragement to you is to write down at least three goals. So, let’s take one of the goals that I just talked about – maximize your retirement savings. This is a goal that I have for myself and my wife, so I can talk about it from a personal experience perspective.

 

SMART test your goals

Now, once you have a goal written down, your next step, fourth step in our process here today, is to SMART test your goals. SMART is an acronym – specific, measurable, attainable, relevant, and you have a specific timeline.

So, let me walk you through this. The goal is I want to maximize my retirement savings. That is a very specific goal. In my case, to maximize my retirement savings and my 401K plan, I would need to save from my payroll deduction $24,000 this year. Second, is that goal measurable? Absolutely. $24,000 a year divided by 12 is $2,000 a month. It’s easy to track. Number three, is that goal attainable? Well, we all have to ask that question, and that goal is attainable for me. Is that goal relevant? Well, this goal is absolutely relevant to me because I want to achieve economic freedom. I know that I’m going to live off my retirement account someday. They’re going to provide the income that my paycheck is currently providing. I want to be able to care for my wife. She is also working, but we are both contributing to our retirement accounts. This nest egg is for us. And then lastly, do you have a timeline for the goal? Well, absolutely. On this particular goal, we have a 12-month timeline.

I will complete this goal of maximizing my retirement accounts before the end of 2019. Now, this particular goal that I talked about here is relatively simple and easy to operate. You could recently replace, “I want to maximize my IRA account or my Roth IRA account,” something like that. But you might have another goal that is more complicated. And so one of the things that I would recommend when you have a more complicated goal… And this is one of the reasons why I want you to download the special report at The Science of Economic Freedom website is what are your plans to attain this goal. What are the five steps if you could write down five steps to get yourself started on this goal?

 

Hire a new accountant

One of your first steps is going to be to identify some candidates. Talk to some friends, get some recommendations, do some research.

A second step on that goal would be to interview that accountant. Make sure that you’ve got some connection, that you would value their opinion, get their expertise. Have them review your previous year’s tax return.

And then moving through that process, if you decide to hire that person, the first thing that I could put them on is developing a tax plan for 2019. Do you see how we’ve taken this goal of hiring an accountant and broken it down into the individual steps that we need to take in order to be able to achieve that goal? That way when next week comes along, and you see that goal, hire the accountant, “Oh, I’m still in the research mode. I’ve got to get three names. And then I’ve got to interview three people.” Well, that might take a month. Those are action steps to achieve goals.

 

Categories for financial goals

Paying down debt. Savings. Now, let me give you some examples.

 

Savings

The savings goal is one of the biggest categories we have out there. Save for your retirement, save to have an emergency account. Saving for college, save for the down payment on a home. Saving to start a business. There can be many savings goals.

 

Income

What I’m talking about now is your career. Do you want to make more money in 2019? I think most people would answer that question as a yes. Well, what are t he goals and objectives of your employer? Do you have a bonus to be able to achieve? And what do you need to be able to do to achieve that bonus? Could you get a second job? Could you make more money in your existing business? Could you earn more money on your assets? So, there is lots of ways to be able to increase your income.

 

Investments

There’s an acronym that I use – ROR, rate of return. Now, the financial markets were down in 2018, four percent on the S&P 500. The average mutual fund I noticed as I read the Wallstreet Journal yesterday was down seven percent in 2018. The average international fund was down 15% last year. So, the financial markets were down. So, it’s not the end of the world if you had a down year in your investments. But I spoke recently to a listener in a wealth coaching context. And when the market was down three percent, she was down eight. And if she continued to hold the investments that she had, she might have ended the year down 20. Well, if you’re down 20, and the market on a blended basis is down 7, that’s a little bit outside of where you should be. And maybe you need to go back and review what your investment strategy is or what the investment adviser is recommending that you’re working with, those kinds of things.

 

Rate of return

But another category of goal setting can be rate of return. You can set goals on taxes. You can set the goal of having a financial plan if you have no plan. What about your legacy? Do you have an estate plan? And again, career, businesses. These all have goals. So, again, my encouragement to you is to set at least three goals. Can you set more than three goals?

Absolutely. But the most important of goal setting is to write it down. One of the things that my wife and I do every year is on New Years day, we don’t plan to do anything. We get up early. I am very fond of watching the Rose Parade, which I use to watch with my mother. My wife is a big fan. She grew up in southern California here. The Rose Parade happens on New Years day, early in the morning. You got all that early morning coverage. Well, we turn on the Rose Parade, watch the Rose Parade, and I pull out the 2018 goal file.

And I create a new tab that says 2019 because the very first step to goal setting is kind of looking back as a goal setter on what were your goals last year. What goals are we going to carry into the New Year? What goals did we achieve? What goals did we not achieve? And I work together with my partner on this.

Now, I want to go back to the numbers again. Only five percent of Americans achieve economic freedom. That does not mean you can’t be happy if you’re not in the five percent. But what continues to be amazing to me is that… I believe I’m quoting this number correctly. 68% of Americans cannot put their hands on a thousand dollars without borrowing the money, without going into debt. Now, that to me is a travesty. One of the things that I’m hearing so much about is living paycheck to paycheck, people having no cash reserves.

 

Gathering your assets

Well, one of the most basic aspects of sitting down with a financial planner, they will tell you, is you’ve got to have three to six months of cash reserves as a safety net around your family. And so for the young people in the listening audience, it’s not about investing in large-cap or small-cap.

It’s just about gathering the assets, gathering the savings, putting away the safety net around your family. It’s that life preserver that you might need if you got thrown overboard. Now, something else that it’s going to take in order to be able to achieve your goals in 2019 and not just have this be an exercise that you do right at the beginning of the year here, and you never look at those goals again is you have to have a positive mental attitude. You can’t go around blaming the world on your current financial situation. Your current financial situation, your balance sheet.

 

Remember to update the balance sheet

And that’s kind of part of the goal-setting process for me is to update the balance sheet, the value of our retirement accounts, and the approximate value of our home, and the value of the assets that we have accumulated. You have to have a positive mental attitude and believe that you’re going to achieve these goals.

 

Overcoming life lies

Now, something else I came across in my preparation for today was a statement about overcoming life lies. And this is where most Americans are living. They’re living in this life lie that they’re going to be okay in retirement. When most Americans have not saved anything for retirement. How the hell are you going to be okay in retirement if you haven’t saved any money? That is a life lie, a financial lie. “I’ll be okay.” And for people who are in a mode of kind of not being truthful with themselves, they may need radical change in their situation. Maybe they need to move to another city or another state.

Maybe they need a new job. Maybe they need to fire themselves as their money manager, hire someone else. Maybe they need to give up control. Some people are control freaks, they don’t ever want to give up control. But if that control that you’re displaying over your assets is not working to help you achieve economic freedom, maybe you are the problem.

 

Acts of commission

Now, there are acts of commission, when you know it’s wrong. And I think the biggest example of an act of commission is people taking on more credit card debt. Credit card companies will bury you in credit card debt. So, I had a conversation with a young gentleman recently who had quite a bit of debt. Had some good income but quite a bit of debt. And felt it was absolutely necessary to go out and buy a very expensive engagement ring for his wife. Excuse me, for his fiancé. And go into more credit card debt. I think the better decision would have been to buy something more modest and when you can afford a more expensive ring to purchase that ring at a later date.

To delay that gratification would have been a better move. Acts of commission when you know it’s wrong, and you do it anyway. Now there is also acts of omission. Don’t know what you must do or should do. For many people, there’s an 800-pound gorilla in the room. There’s an elephant under the carpet. There’s a skeleton in the closet. And they’re refusing to admit they’re continuing to make an error. You have to realize that this game that we are playing of managing our assets for a positive outcome is just that. It’s a game. Remember the game of life? This is the real game of life. And the game of life has rules. Financial success, the achievement of economic freedom requires goal setting. We’ve got to have milestones, and timelines, and facts. And we have to monitor, and we have to look in the mirror.

This is why most people fail. Most people don’t do this. So, as we wrap up today’s show, tell the truth about your finances. Tell someone else – your spouse, a friend, a family member. Tell them about your new goals – the three goals that you set, if you’re following my advice.

 

Action steps

So, here are the action steps from today’s program.

1) Listen to episode 42, resetting your financial goals. This episode right here right now, listen to it again. This is a habit that I got into based on a recommendation from my dad. One of the books that he gave me when I was a young man was called “Think and Grow Rich.” He told me to read the book three times.

I looked at him like he was crazy. I was hoping to just read it once, but he was telling me to read it three times. I’ve read that book ten times. But sometimes with complicated material… And this is complicated stuff. And some of the stuff I’ve said today might have stirred up some emotions in your head or in your stomach. It’s best to listen to it again.

2) Write down the three goals. Now, that’s a minimum. That’s a minimum bar – three goals. Certainly, there is no limit. But realize that you can only focus on so many things.

3) Tell someone else about the goals that you have set for yourself this year. That will help you remain committed to achieving these goals in 2019.

4) Develop a five-point plan for each goal. And lastly, take action. Let me leave you with this – economic freedom is available to all those in America who desire to achieve it. But sometimes you got to make changes. Sometimes you have to make radical change in order to be able to get yourself moving down the right path.

 

Closing

The people who have achieved economic freedom have delayed gratification. So, as you’re absorbing everything that we’ve talked about here in episode 42, I just want to encourage you to achieve your version of economic freedom. You can do this, but it begins right here and right now with taking the next step. Remember, I’m here to have conversations with you. You can have a one on one coaching session with me or a member of my team by contacting us at The Science of Economic Freedom website or sending me an email at [email protected]. And we’ll sit down and have a conversation that’s going to be all about helping you identify what your next step should be on your journey to economic freedom. This is Doug Fabian. Thanks for listening.

Announcer: The Science of Economic Freedom is intended as an investor education resource. The views and opinions expressed on this program should not be construed as a recommendation to buy, sell, or hold any specific security. Consult your investment advisor and read any investment prospectus carefully before making any changes to your investment portfolio.

This program is sponsored by Mercer Advisors. Mercer Global Advisors, Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors, Inc. is the parent company of Mercer Global Advisors, Inc., and is not involved with investment services.

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