The Power and Importance of Written Financial Goals

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People believe that their circumstances dictate their actions. They don’t realize that they can begin to dictate their circumstances by taking a single step in the right direction.

In my recent series on Values and Budgeting (Part One and Part Two), I highlighted a progression toward writing what I have coined V-SMART Goals. As a review, V-SMART Goals are

Values-based, Specific, Measurable, Attainable, Realistic, and Time-Oriented

When I wrote this post, my natural assumption was that a majority of the population implemented SMART Goals or general goal-setting practices in some capacity. A bit of research showed that my assumptions were quite naïve.

The Shocking Statistics About Goals

In the book What They Don’t Teach You at Harvard Business School, author Mark McCormack cites interviews performed with new graduates from the Harvard MBA program in 1979 and 1989, respectively. Full disclosure: The above link is an affiliate link. I have not yet read this book in its entirety, but it is on my reading list. However, the statistics contained in the book are alarming.

In 1979, interviewers determined that:

-84% of adults had no specific goals
-13% of adults had specific goals that were not written down

-3% of adults had specific, written goals

When this cohort was interviewed again in 1989, the results showed were predictable:

-The 13% group had, on average, earned twice as much as the 84% group who had not established goals
-The 3% group who had written goals, on average, earned ten times as much as the other 97%, collectively speaking.

Impact of Goals is Not Limited to Income

While the results above should not surprise us, they left me with unanswered questions.

-In 1989, which group, on average, had the highest net worth?

-In 1989, which group had the highest percentage of written monthly budgets?

-In 1989, did the 3% cohort create and monitor written goals for other areas of their lives?

Without having access to the interviewees, we cannot ascertain the answers to these questions. However, I feel the answers are not likely in doubt.

In my own life, I have seen that greater organization and goal setting in one area can easily spread like wildfire into other life areas.  When I got my act together, financially-speaking, and set written goals, I suddenly became highly aware of other areas in my life in which I needed to establish written goals and hatch plans to achieve them.

For example, as a new graduate who had just entered the workforce, I established a written budget and soon realized that I needed a similar plan to improve my physical fitness. I began running with a friend, signed-up for a half-marathon and later a marathon, and trained according to an established plan. Without realizing it, I had created a SMART Goal for my race training, even though aspects of the goal were unwritten (For shame!).

When I got my act together, financially-speaking, and set written goals, I suddenly became highly aware of other areas in my life in which I needed to establish written goals and hatch plans to achieve them.

The Power of Written Financial Goals

I strongly feel that the power of written financial goals cannot be overstated. One my favorite talk radio hosts, Dave Ramsey, often says, “If you aim at nothing, you will hit it every time.” By definition, having no established goals is aiming at nothing.

In order to adhere to the Superhero Value of Maximization, you must strive to make every single penny work hard for you, and this begins with written goals. As mentioned previously, I prefer to think of my dollars and cents as employees. If I do not direct them, they will not be maximized. Furthermore, this is the one time in which I am a huge advocate for micromanagement! You should be reviewing your finances with a fine-toothed comb on a regular basis.

When you established Values-Based, Measurable, Attainable, Realistic, and Time-Oriented Goals, you are poised for a high probability of success. Additionally, you are only one step removed from being able to share your goals with others, who in turn will be able to hold you accountable. Even the simple act of posting your written goals in a prominent place in your home, such as your refrigerator or bathroom mirror, can simultaneously serve as both a means of keeping your goals at the forefront of your mind and providing accountability.

Why Some People Continue Without Written Goals

Over the years, I have heard people share many reasons for their lack of written goals. Frankly, I am not a fan of any of them. I find it is easy to make excuses, and I hate when I catch myself doing it. Here are a few of the common reasons/excuses I often hear:

They don’t think about goals. Why? They spend too much time on social media, TV, and other major time wasting activities.

They don’t know how to write goals. They must learn the V-SMART Goal writing process.

They have given up. They believe their circumstances dictate their actions. They don’t realize that they can begin to dictate their circumstances by taking a single step in the right direction.

Financial Goals for Everyone

To get started with written financial goals, I believe everyone should pause for a moment and visualize what they would like their financial landscape to look like next week, in 3-6 months, in one year, and in 3-5 years. By beginning with the end in mind, we can create goals that will serve to motivate and inspire. After jotting down some notes, you are equipped to begin writing goals in the categories below.

Note: Brief, vague examples are provided in parentheses; these examples may not fit your circumstances. They should be modified to align with your visions and expanded to meet V-SMART specifications based upon your specific circumstances.

Short-term: (reduce your weekly spending, renegotiate television/internet contracts with service provider)

Intermediate/Mid-range goals: (pay off debt, establish a 3-6 month emergency fund, save for a home down payment)

Long-term – (purchase a rental property with at least a 20% down payment, create multiple streams of passive income, reach a net worth of $1 million, retire early!)


Readers, do you maintain written financial goals? Do they follow the V-SMART recommendations? What barriers are preventing you from establishing written goals? How have written goals boosted your achievement in the past? Share one current financial goal in the comments section below!

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24 thoughts on “The Power and Importance of Written Financial Goals

  1. Great post and interesting statistics

    I write down yearly financial goals and recently started looking at our spending on a monthly basis. A big plus of blogging is you can put them out there for everyone to see (extra motivation if you need it)

    1. I think if more people were aware of the statistics, we would become a more goal-oriented society.

      It is interesting that you mentioned the value of putting goals out publically. I am planning a future post in which I will do exactly that. I hope you’ll come back to dissect my goals!

  2. I always believe there is a value in setting and writing financial goals. Like you, I follow the SMART process and ever since I adopted it, I have been able to achieve my goals with little to no problems. I guess because I have laid out what I need to do.

    One of the financials I had was eliminating my debt, which I completed paying in December of 2015. I was indebted to the tune of $40K. I made it a goal and paid off in 2.5 years. Luckily, at the same time, I was able to save at least $70K even when I was the only one working in my family.

    I believe that without goals, a person will always travel on a long and winding road without any successful end in sight. To be successful is to have a goal.

    Great post.

    1. Allan, thanks for commenting. It is great that you were able to set a goal to eliminate your debt and accomplish it while also saving a significant sum of money. Did you scale back lifestyle significantly or gain a raise during that time? Or did having a SMART goal give you the focus and motivation you needed to reach the finish line?

  3. Great post, Hero! I thoroughly enjoyed reading it. I couldn’t agree more with you. In the month of December, I sit down and write down my goals for the next year.

    In addition, I write my financial goal on a piece of paper and put it into one of the transparent pockets in my wallet. Every time I open my wallet, I am constantly reminded of my goal and it motivates me towards the goal.

    I have been doing it for three years in a row now and I will admit that I have so far achieved my goal every single time.

    1. Michael, I think placing your goals in your wallet is a phenomenal idea! I have placed goals on notecards on my refrigerator and bathroom mirrors before, but the wallet idea is a new one for me.

      Congratulations on adhering to your goals over the past three years, and thanks for your comment!

  4. Goals are so important. Even something as simple as an expense goal in the form of a budget goes a long way.

    When I started working, I wasn’t spending much as a student, so when my income increased, I didn’t worry about my spending. And that trend continued until finally I decided to control my spending.

    As soon as I started tracking expenses and living within a budget, not only did I spend less (and save more), but I had less worry over the expenditures I did make.

  5. My favorite part of this was “beginning with the end in mind”. If you don’t really know what you’re working for you won’t have motivation to save that extra $100.

    I’ve been keeping track of my goals in Mint for a while but it’s a lot easier when you have accountability. Now I’m publicly documenting my progress, as I’d recommend everyone do as it really gives you that extra push to keep up with it.

    1. Mint is a great tool. I currently use EveryDollar and PersonalCapital, but only because I prefer their user interfaces.

      Public accountability is a very powerful thing, especially when achieved through a blog platform. I am working on a post featuring my goals so I can have others hold me accountable. Have you found that it helps you, FiFever?

  6. Currently, my income is too variable to have such specific goals regarding numbers. However, I have written down my goals about skill development to get my income both higher and more stable.

  7. Good post and I 100% agree with goal setting although I’m pretty positive the supposed 1979 Harvard study on goal setting is a myth. As well as another popular 1953 Yale study. There is no proof that either of these studies actually took place.

  8. Great post!
    It’s nice to be able to back up the importance of goal-setting with numbers.
    I set a daily list each day, and a monthly list I blog, plus a semi-annual review. But there’s some skill to goal-setting. I have to get better at setting the right goals. Thanks for sharing!

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