The 'why' of financial goals

Everyday Stewardship |

Understanding the purpose helps us stay on track

When I meet with clients, I try to spend more time reviewing progress toward identified goals than on investment returns. If clients earned 15 percent last year on investments but aren’t on pace to achieve their goals, did they have a good year or not?

Setting goals is an important part of life in general and certainly in financial planning. When considering and setting goals, I like to ask, “Why is that goal important to you?”

A common goal I hear is, “We want to become debt-free.” I often see puzzled looks when I ask, “Why do you want to become debt-free?”

Isn’t becoming debt-free a good thing? Probably, but I want to know why being debt-free is important to my clients. What could they do if they were debt-free that they cannot do today because they’re in debt?

Becoming debt-free is more of a strategy than a goal. Being debt-free should free up people to do something they previously could not do. Ideas include giving 15 percent of our income, helping kids graduate from college with less than $10,000 in loans, retiring at 66, etc.

Goals are much more easily pursued when we understand the “why” behind them, and much more easily abandoned when we don’t. Some who became debt-free but didn’t know why that was important found themselves in debt again several years later.

Once goals are defined and we know the purpose of each goal, we can start making financial decisions to achieve those goals. Financial goals should be very clear and include a time component so progress toward the goal can be tracked.

Eric Schroll


S. Eric Schroll
Financial Advisor

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