Tuesday, March 28, 2006

Thinking about annual financial goals

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My wife and I have worked on our annual goals a few times this year. I'll post ours later tonight, but I felt it might be helpful to share how we think about our annual goals and ask others to comment on their approach.

Key Drivers that help define annual goals

1. Very long term goals and responsibilities; e.g.
  • Retirement for ourselves
  • College education for the children
  • Estate planning commitments

2. Medium term goals

  • Where do we want to live
  • What kind of house do we want
  • What lifestyle do we want

3. Short term goals

  • Schooling for the children
  • Assistance to relatives
  • Special purchases
  • Home rennovation
  • Capital purchase such as a car
  • Special vacations

The items above are not goals as much as considerations we have while planning our annual goals. Perhaps they either influence or represent the destinations we attempt to achieve.

A more formal process is the Franklin Planner / Covey method. I find it very exciting and quite interesting, the whole concept of First Things First is great. Their structured approach starts with value definitions and roles and leads to an effective definition of goals, milestones and ultimately strategy.

I have never been more efficient in my business life than when I used the Franklin Planner approach. I'm considering loading it into my computer and telephone, but I'm a bit nervous it may crash or compromise the stability of MS Outlook. They tell me the newer versions are more stable, so I'm quite tempted.

The challenge in using the Franklin Planner / Covey method is that both partners really need to get into it. In business, I can use it alone. My wife is a very efficient and focussed person, she has a keenly clear vision of what should be a priority. I think she finds the Franklin approach laborious and unnecessary. So although we cannot share the same methodology, which is a pity, we do discuss the results of our individual analyses.


We try to discuss and set overall goals at the beginning of the year and either update or modify them quarterly. I project our cash flow 90 days in advance. My technique is fairly simple. I have quicken automatically enter all repeating expenditures. It also automatically enters estimated expenses for items that are expected to occur. The first few weeks I used the technique I had to tweek the auto-entered transactions fairly frequently to reflect reality. Now the numbers are usually quite right. Only times of significant change - such as buying a house and moving into it, do the numbers fail to hold reliably.

Plans meet the reality of the numbers

What's wonderful is that I can compare our expected plans against the next quarters planned cash flow and we can see the impact of different ideas. Some ideas just can't work out without compromising savings goals, etc.... When we hit the point of compromise we begin discussing priorities and resolve the issue.

Keeping the goals in front of you

One thing I noticed is that writing goals down doesn't guarantee you'll execute on them. Franklin Covey has a wonderful method whereby you plan your week and daily to do list based on your long term plans. It's phenomenal.

I'd like to post our goals in several visible places so we keep following them, the unfortunate aspect of that is that we're not too comfortable having our guests read our personal goals as well. We really need a compromise location. I'm thinking maybe infront of the toilet in our bathroom. Guests seldom use it and it's hard to ignore once there.


Quartlerly goal setting is not just about setting next quarters goals, but also to review which goals were completed from last quarter and what new needs to be done.

Goal setting tools

I recommend the following:

1. Franklin Planner (any of the various incarnations). I specifically have used Plan Plus for MS Outlook. The task list is invaluable.

2. Quicken life event planner - it's built into quicken 2006 and is very kludgey - but it does help you plan for various life events, capital expenses and savings. It's quite comprehensive. It can also be used to set traditional budgets and track your compliance.

Our Goals for 2006

I'll post these in a separate post.

Questions for others

Do you plan your goals annually?

How do you do it?

If you're married or have a partner, how do you do it together?

Have you set long term goals? How do they interact with your annual goals?

Are there any planning tools that you use?


Bill Tyler said...

Excellent suggestions on goal setting. I particular like your thoughts on setting both long and short-term goals.

I use a product called the Bubble Planner. It breaks down goals into different categories (FISHES): Family, Intellectual, Social, Health, Economic, and Spiritual.

I have found that the Spatial Design of the planner encourages me to take action.

makingourway said...


Thanks for the compliment.

I've checked out your bubble product, it's very interesting, a bit different - reminds me of idea mapping.


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