Ep # 32: Defining Your Goals Is Hard. Start With Sharing Your Why.

Benjamin Haas |

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Benjamin Haas  00:02
Hi everyone and welcome to A/B Conversations where we will help you CFP your way out of it. A podcast where you get into the minds of a couple Certified Financial Planners on how we think and feel about everyday financial planning questions and what should really matter most to you. A healthier financial life, starts...now!

Adam Werner  00:26
Hey Ben, happy podcast day.

Benjamin Haas  00:30
Hello, Adam. I'm wearing the same tie as I did for the last one. 

Adam Werner  00:35
The last one that we recorded last week, wink wink.

Benjamin Haas  00:39
Caught me. How are you doing?

Adam Werner  00:42
You could've taken your tie off and opened your button and then it could be completely different.

Benjamin Haas  00:46
Here I am giving it away. All the secrets. 

Adam Werner  00:50
Yep. So today we're going to get into an interesting topic. I think the idea was always in financial planning, you had to have a goal. A clearly defined goal of which you needed to then do the math to figure out if you could reach that goal and that was planning, quote, unquote. I think we're here to dispel that myth, share how we view it, and we can kind of back our way into maybe those specific, measurable goals but we firmly believe that purpose. Why money matters? What are you looking to accomplish with that money? Like, what are your life goals? What do you want to see happen? And then we can back our way into what does that mean financially?

Benjamin Haas  01:45
Amen, brother. I believe that is so well said and I believe it really is one of those things. I hope there are people out there who will do financial planning because they've heard that because the pressure of needing to define some sort of financial goal. I hope that just goes away. Let's be clear, that's our job. It's our job to take what matters most to you, like you said, and kind of almost reverse engineer it into what does this mean then for your finances so that things can be aligned? And it is, those are good questions. What matters most to you. For some people, it's like, What are you trying to avoid? We want to put that all packaged into some sort of statement of, what's the financial purpose behind the decisions that you're making? So that whatever that is for you. I point to Carl Richards, again, he's somebody in the industry that we follow that I think behaviorally kind of gets it and how to communicate it. For him, it's spending time outdoors with his family like that is the purpose behind what he does to lead to that. So that doesn't sound like it has anything to do with finances.

Adam Werner  03:02

Benjamin Haas  03:02
But I think if there were some big decisions that he needed to make, he doesn't fall into this kind of cycle of not being able to figure out what to do. If he can keep the main thing, the main thing and that is I'm aligned to this. 

Adam Werner  03:15
Yes, it's figuring out what those one, three however many, that's your guiding NorthStar that all of your decisions hopefully align with and that's ultimately our goal is trying to align what you're looking to see happen with your financial resources. Let's make sure these things are actually working together in concert and you're not having competing thoughts. 

Benjamin Haas  03:41
Yeah, I don't want the good professional resources for this and the good studies on like, how to actually accomplish a goal. I don't want that to sound like we're throwing that out the window. There is something to breaking down a goal into smaller pieces. I'm sure you've heard the acronym SMART goals. It's specific, measurable, actionable, realistic, time bound. There is something to that but I don't want it to feel like if you don't have all of that SMART goal, that it's not a good goal, right? That's bullcrap. Adding parameters to goals, that's good enough to start creating the direction that you need to be going in and then we're going to help you start to define those smart aspects of it, to make sure that we're doing what we need to do. 

Adam Werner  04:34
Yeah, I think that's the key and you said it and I'm thinking in my head to a recent client example, was a younger client that has kids is saving for education for their kids, but there wasn't a specific goal. There wasn't, oh, I want to cover all of their education costs in college now or I want to cover half or I want to cover a year or I want to cover a specific dollar amount. It was just I want to save what I can for my kids.  

Benjamin Haas  05:00
Yeah. Now I know you're talking about.

Adam Werner  05:04
Retirement, it's so far out there, I don't have a specific goal just at some point I want to be able to not have to work. But like, there weren't firmly defined goals and that was okay. We got to the heart of like, the purpose behind everything in his financial life was, I saw both of my parents pass away before they retired and I don't want to leave anything on the table. I want to provide as much as I can for my wife and my kids and that was the purpose. Now we can back our way into, okay, if that is the driving force here, then let's figure out how to make that fit with all of your other resources so that you can accomplish that as the main motivator behind everything that you're doing. 

Benjamin Haas  05:49
Yeah, and remain flexible because here's kind of the point. You can say you have a financial goal and that's great, people come to us, it's I want to retire by this time. I know I need this much money. Great, that does make our job easier and we can align to that but by the way, here's what we know. Your goals are going to change when it comes to finances. These things are going to change. Yeah, the purpose behind them, the core of who you are and how you make decisions and what really motivates you, your why (hi Katie), your why that's not going to change. That's probably a deeply embedded in who you are so we got we got to get that out of people. That was a great example, you know, thinking of that person because I think we struggled with that on the front end. We're like, man, yeah, he's on top of things. What are we going to give him if we don't have like, save this much by this time? But that's not it. It's remaining flexible and being able to take a lot of these different moving parts and say, well, if this is ultimately what you're looking to do just broadly provide for your family, then keep doing this, keep doing this, by the way, we can tweak this and let's just stay on top of it. Like that's good enough. We've created the parameters for that to lead him down the path that he needs to be going on.

Adam Werner  07:05
Yeah, yeah. 

Benjamin Haas  07:08
I think that's often why we ask the question to when I'm going back to the kind of the how do we reverse engineer purpose and the goal and I know we've said this in different podcasts. I think it's okay to take that and put it into like, two-to-three-year chunks, or five-year chunks, especially when it comes to young accumulators in retirement but I'm thinking of another client situation where the effort is put into making the right decision. By his definition, that's the perfect decision all the time and without that overarching, like, here's the main thing. The ball kept moving and you can't really figure out well, if I'm tackling this goal but I'm not tackling this goal because I'm tackling this goal, then am I doing the right thing? Man, what's the purpose? Like, what are we really working towards? Without that guiding star, people can get really stuck. 

Adam Werner  08:03
They get twisted like a pretzel.

Benjamin Haas  08:08
Let me throw it to you. It's kind of that, I don't know if this is really technically a rule of unintended consequences but that's we refer to it. 

Adam Werner  08:18
Yeah, where you get so focused on any one idea or one strategy, or just when you get so focused on, I want to limit my tax exposure, I don't want to save as much on taxes today. Well, that's great, right? You save all your money in a tax deferred position. You're doing all these things to limit your tax bill today but by making those decisions, how's that affecting what your tax bill is going to be 10 years from now, 20 years from now, at age 72. If you have money in a retirement account, where the IRS says, hey by the way, you got to take roughly 4% out this year and every year until you die, it's going to go up, and then you can't you can't control your taxes at some point in the future. It's the unintended consequences of decisions that are being made today that we often see. It's our role, again, to give the context, give the perspective, understand the tradeoffs, and really see the big picture where oftentimes, if you're focused on one particular thing, it's hard to do that. What's the saying? It's hard to see the forest from the trees or something like that. 

Benjamin Haas  09:29
Yeah, and that's one of those examples, again, where I think people just get in their own way and if you truly are able to articulate the purpose behind things, again, that's going to become clear and how do we do that? I think it's just a lot of the why questions.  I'm thinking about a conversation we had with wonderful people we just met in the last, I don't know, two or three weeks. And, look, people usually come to us with some sort of fire to put out and in her case, it may be like, I don't think I can take this Job, physically, mentally, I don't think I can continue to do this. Well, is it really important that she define exactly what she wants retirement to look like and the money that she wants to live off of? And what is it going to be this versus, it's not at all right because that's not what matters to her. And at, you know, mid 50’s, again, things are going to change. But this week, can we at least get to the heart of like, okay, what matters to her having some flexibility of time. Feeling a little appreciated, being able to spend time with a spouse that's been retired for a little while. The rest of it, we can work out. We don't have to have that clearly defined right now. 

Adam Werner  10:41
Yeah, and I think that's where the purpose can dictate the goal in that, okay, now that we understand this is her why, we can then go through the planning process and give some parameters. Give some guardrails of, here's what we see can work. Does that feel comfortable? Is this a scenario that you could see working for your life? And if not, then let's figure out what those variables need to be or what changes need to happen to make that a comfortable path. But I think a lot of it is just giving those, it's the bumper bowling analogy, giving those guardrails, as long as you can stay within here, that feels okay. And we think that will fit your situation to allow you to meet your needs going forward, then you need to firmly define I want this amount of income and I need to retire at this age, it can be slightly flexible. 

Benjamin Haas  11:42
Well and I like that visual Adam because it's not only guardrails here but you're also putting a floor to something. Oftentimes, success for us is just knowing what we don't want to see happen and making sure that we're avoiding that. So again, sticking with this potential client situation. It's really not Can I retire successfully for the rest of my life? That's not the point and we can't answer that because you don't have enough definition around that but we can talk about, look, yeah, you can do this, take this step forward. And if we know that the there's not these crazy, unintended consequences because we've considered X, Y, and Z, then it may be good enough for her to know, I'm not taking 10 steps backwards by making this type of decision. So yeah, again, as long as we're aligned to moving forward in a healthy way, both mentally and financially, then that to us sometimes is good enough.

Adam Werner  12:41
You said it earlier too of trying to break it into smaller bite size periods of time. I think that's part of the problem with trying to define goals or just even have a specific goal is that they feel for the most part, usually they are longer term. They're so far out on the horizon. It's hard to even wrap your mind around that coming to fruition at some point, right? It's the whole point of like, delayed gratification, right? Well, us as a society, we're not so great at that anymore. We want that instant gratification and thinking about, you know, in our world. If we're in our 30’s and retirement is 25-30 years from now, that's hard to wrap your mind around what's life going to look like so far in the future and that's okay. Let's back our way into, again, it's the purpose, it's the why is this stuff important to us? And then again, you can then start to break that into smaller, more digestible pieces that you can start to see some progress over shorter periods of time. 

Benjamin Haas  13:53
Yeah, jot down the next micro action you can take to put yourself moving in the right direction. So, I think it's a good one, I hope people again, hear this and feel good about it. I think one of the things that we're giving the secret sauce here to like how we want to work with people. We will help you put out your fire. If you're coming to us in the first meeting, and it's Hey, I have to make this decision or this is what's wrong, we'll help you there but we're going to ask a lot of questions around why. Why does this matter? Why is this prioritized? Because we want you to keep perspective on that with every other decision you're going to make, even if it's not a clearly defined goal.

Adam Werner  14:35
Yep. Well said.

Benjamin Haas  14:37
Anything else on the topic of, well, I don't even know if we use these words. We lump that together by saying we want somebody to have their statement of like financial purpose, like why does this matter? So anything else on statement of financial purpose? 

Adam Werner  14:52
No, I don't think so.

Benjamin Haas  14:54
Alright, man, thanks for doing it. Thanks for what you do. 

Adam Werner  14:58
Short and sweet. 

Benjamin Haas  14:59
Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we voiced in the show are for general information only and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you. Consult with your attorney, your accountant or financial advisor or tax advisor prior to making any decisions or investing. Thanks for listening!

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