By mid-year, our financial goals may have been changed or neglected. Don’t panic! Financial advisor Matt Becker of Mom and Dad Money shares how he helps his clients refocus and get back on track.
Every January I see my clients begin the year with a renewed sense of purpose and excitement as we lay out a new set of financial goals. It’s a fun burst of energy that usually leads to us getting a lot done in a short period.
But as we creep up on the six-month mark and summer starts to take hold, that energy has often faded. Life moves fast; other responsibilities creep into the picture, and it can be hard to stay focused on the priorities we set months ago.
But it’s my job to make sure that my clients actually reach their biggest goals, and the middle of the year is often the perfect time to rattle the cages.
Here’s the process I use to help my clients kick mid-year inertia and get back on track.
Step 1: Celebrate the Wins
It’s easy to get caught up in the never-ending question of what’s next? But it’s just as important to step back from time to time and reflect on what has already been accomplished.
So my first step is to look back at my client’s goals for the year and take some time to celebrate anything they’ve either completed or gotten on track.
Have they built an emergency fund? Gotten the right insurance in place? Set up the automated savings that will fund a down payment on a house in a few years?
Anything like that is worthy of a celebration, whether it’s a simple acknowledgment of the accomplishment, sharing the success with friends and family, or a refreshing cocktail sipped in the warm summer sun.
Celebrating the wins along the way makes it clear to my clients that they are making progress and motivates them to keep making positive decisions.
Step 2: Make a Plan for Any Goal That’s Lagging
While some goals will be right on track, it’s only natural for others to have fallen a bit by the wayside. And instead of letting these goals continue to lag, I try to figure out why progress has stalled and then make a plan for getting them back in motion.
The first question I like to ask is whether all these goals are still relevant. The reality is that life can change quickly, and something that felt important at the beginning of the year may no longer be quite as high of a priority.
If we find a particular goal is no longer relevant to the life they’re trying to build, we can drop it. There’s no point in continuing to put time and energy into it if it’s no longer meaningful.
But many of these goals are still important, and from my experience, there are usually two big reasons why they’ve been left behind:
- The client has forgotten why the goal was important to them in the first place or at least hasn’t had the reason reinforced in a while.
- The action plan for completing the goal has gotten stale, so the steps for reaching it are no longer clear.
So for any goal that’s lagging, I work with my client to clearly state the reason behind the goal and to create a specific set of action steps with clear deadlines that will get it back on track.
Once the goal and the path to achieving it are clearly laid out, it’s a lot easier to make progress.
Step 3: Set New Goals
To ensure we’re continually working toward my client’s current vision of her ideal life, and not just checking off the boxes we created last year, I always want to know if there’s anything new that she would like to be working towards.
One of the big sources of new goals is a major life change, like a new job or a pregnancy. This type of change can bring about both new responsibilities and new opportunities, and I want to make sure we prioritize both.
But there are also subtle changes that happen over time, and I like to stay on top of those as well. As an example, once my clients get the basics in place and no longer feel stressed about their day-to-day finances, they often start to think about bigger goals like starting a business, traveling the world, or even retiring early.
These are things that may not have felt realistic before, but do now because all their urgent questions have been answered.
So we talk about these potential new goals and put them in some kind of priority order. Then, just like before, we create a specific set of action steps for each one so we have a concrete plan for making them a reality.
Step 4: Review Spending
I’m not a big fan of traditional budgeting, and as a result, I don’t have much interest in micromanaging how my clients spend their money. My focus is getting their biggest goals on track. What they do with the rest of their money is up to them.
Still, it can be helpful to review long-term spending trends with two big questions in mind:
- Is their money being spent on things they actually value? If we find any areas where the answer is no, we can brainstorm ways to shift that spending towards something they do care about.
- Have there been any unexpected expenses that threw a wrench in their plans? If so, we can use that information to be better prepared for the next time it happens.
Step 5: Make Small Improvements
It’s fantastic when my clients are on track with their goals, but I also like to encourage them to go a little further—especially when I think it could help them reach their biggest goals even sooner.
One example is finding small ways to increase their savings rate. After all, it’s your savings rate more than anything else that determines when you reach your goals, and even little increases can have a big impact over time.
Here are a few ways we find those small increases:
- Increase 401k contributions by 1 percent: This is often a small enough change that they don’t really even notice it, especially when you factor in the tax savings.
- Put 50 percent of raises towards savings: Half of that raise is still available to spend as they please, but this makes sure that we’re always prioritizing the future as well.
- Cut a bill: If they can do something like negotiate their cable bill or switch to a lower-cost cell phone plan, we can put at least some of that monthly savings toward their long-term goals.
Step 6: Schedule the Next Check-In
Financial planning is never a one-time effort. People’s lives change. Their values change. And their financial plan needs to change along with them.
So at the end of the year, you will usually find me re-visiting this same process with my clients all over again. It’s an ongoing effort, but one that ensures that my clients’ money is always working toward their biggest goals.
Matt Becker is the founder of Mom and Dad Money, a fee-only financial planning practice dedicated to helping new parents build happy families by making money simple.
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