Why Achieving Short-Term Goals are More Important Than Achieving Long-Term Goals
The journey is more important than the destination. However, you also don’t want the destination to be a pit of misery because you lived it up a little bit too much on your journey. Often times, when it comes to financial planning, I hear from prospective new clients that although they think saving for the future is important they want to live life now. I agree… partially. I think a healthy balance of experiencing now, in the short-term, and long-term makes more sense than overweighting any one area. That’s why I created Level Up Financial Planning, to help Gen X/Y families properly balance their life and finances so that they can maximize their lives now, tomorrow, and still be excited about the future.
Below I will explain the different stages of goal planning:
YOLO (You only live once)! Never thought I would type that, but that is essentially the philosophy for those who have an ultra short-term focus. This approach to planning or lack thereof is what causes people to live paycheck to paycheck. If an emergency situation arises, it is no big deal because that is what credit cards are for, right? What happens though, is that an emergency situation can have avalanche effect where not only are you living paycheck to paycheck, but your lifestyle without emergencies now requires you to expand your debt load. This need for immediate gratification impacts your life in more ways than just financially. Want a better paying job or career, those things do not happen overnight. If you are unable to have that instant gratification most people give up on making the necessary maneuvers to be better positioned to achieve those short-term goals.
What is considered short-term? In my opinion, it’s something that is greater than three months out and less than three years. Some popular short-term goals would be a vacation, building an emergency savings fund, starting a family, marriage, paying off student loans, working for a promotion, etc. You obviously have your own personal situation with your own meaningful goals. These goals are typically significant milestones and may have even been long-term goals at one point.
Did you know that studies have shown that one of the biggest factors of being successful in anything you do, is first having confidence that you are capable of being successful? Having short-term success in working towards a goal builds confidence and when your various short-term goals are added up, they typically allow you to achieve those huge long-term goals. If you decided you wanted to run a marathon, would it be practical to immediately throw on your shoes and go for it? Not unless you enjoy torture. Instead, you would set up a game plan to break down a seemingly crazy goal, into bite-size goals that as you achieve them will prepare you for the main goal of successfully running a marathon.
A financial example would be saving up an emergency savings of $10,000. If you are starting out from $0, that could seem like an insurmountable task, but if you break the $10,000 down to a more manageable $2,500 (to get started), well that seems much more manageable. After you reach that first $2,500, the remaining $7,500 will be substantially easier to achieve because you would have already proved to yourself that you can be successful in reaching your goals and your mind will be less resistant.
Success has a compounding effect that most people don’t realize. This compounding effect makes relatively small achievements from the past crucial pieces in building your best life of the future. Think of one of your proudest achievements. Now think back on all of the actions you had to take along the way. No doubt, you pushed yourself out of your comfort zone and had to resist the ever-present option to give up or take an easier route.
It is not impossible to achieve long-term goals, but it is definitely impossible to achieve long-term goals if you never achieve short-term goals.
Although I feel the ability to achieve short-term goals are the most important, long-term goals provide the vision and motivation to power you through the changes that are needed to overcome the hurdles that you will face to achieve those short-term goals. The problem with achieving long-term goals is that they can change. If you weigh your successes on whether you achieved a long-term goal that is no longer important to you, it would cause you to go mad.
Many people have a hard time thinking about long-term goals because they can change, they are so distant they feel they have time, or they feel like they are impossible to achieve. Don’t overthink it. In my experience, on your way to achieving long-term goals, the progress you make not only builds your life story but often positions you better off than you would have been if you chose to work towards nothing. So what if your goal changes! Your experiences and short-term goal successes can usually be repurposed in helping you achieve the new long-term goal you set. Sometimes you discover those new long-term goals as a result of your journey of trying to achieve something else.
Having a balance financially depends on when you get started and what your financial goals may be. If you start earlier than you have more flexibility due to the compounding assistance of time. If you start later then you have to work harder to achieve the same goals.
How do you find balance? It’s helpful to take the time to think about the whole picture. When I first start with a new client we talk about their past experiences, their current situation, their goals of all shapes and sizes, and then we build a Mind Map showing how complex their life is, but also how it all fits together. We also use our discussions and all of this information to build out a plan for what is possible and what they can do to achieve their goals. We make sure that they are comfortable with their current lifestyle and have confidence that they have a reasonable shot at achieving their goals. If they are not on track, we explore different opportunities to close the gap and attempt to achieve that balance.