Last month, I shared cataloged a dozen different exercises you can use to help discover your purpose and passion in life. Today, I want to explain how you can set effective goals to support your mission. Your mission provides a purpose, and your goals reinforce that aim by keeping you focused on what’s important. They organize your actions and give your daily life direction.
Before I committed to becoming debt-free, for instance, I bought whatever I wanted without regard to the future. Because I lacked a focus, one use of my money seemed as good as any other. It didn’t matter that I spent on comic books and computer games because I had no greater objective.
After I decided to get out of debt, things changed. Those trips to the comic shop became obstacles to a greater goal — to escape the chains of debt. So, I set short-term goals — to spend less than $20 on comics each month, to sell the stuff in my garage to earn more money — that helped me get to where I actually wanted to go.
As a money boss, you too should set goals to support your larger purpose — a handful of high-level goals, some midlevel goals, and plenty of low-level everyday goals. Your personal mission statement provides general guidance; goals give specific direction. They act as milestones on the journey toward your destination.
To begin, let’s look at how to set smart goals.
How to Set Good Goals
If you ask most people how to set good goals, they’ll tell you they’re supposed to be SMART: specific, measurable, achievable, relevant, and timed. While this sounds great — and it’s a methodology I’ve pushed in the past myself — there’s no actual evidence that it works. (Maybe your research skills are better than mine; if you can find studies that show SMART goals are effective, please let me know.)
So what kind of goals are effective? In The How of Happiness, Sonja Lyubomirsky shares her summary of the studies into productive (and happy) goalsetting. “There is persuasive evidence that following your dreams is a critical ingredient of happiness,” she writes. And it matters which goals you pursue while following those dreams.
The pursuit of goals that are intrinsic, authentic, approach-oriented [which I’m describing as “positive” in this article], harmonious, activity-based, and flexible will deliver more happiness than the pursuit of goals that are extrinsic, inauthentic, avoidance-oriented [or negative], conflicting, circumstance-based, or rigid. This mouthful of words is based on decades of research.
Let’s look at each of these qualities a little more closely. According to science, Lyubomirsky says, the best goals will be:
- Intrinsic. Good goals come from inside you, not from an outside source. You’ll be much more motivated to get things done if you’re acting because you want to and not because you have to. Your goals should be things you’d do even if you weren’t required. (A bad goal is one you pursue simply to please others. Think “want” over “ought”.)
- Authentic. Lyubomirsky says that people are happier, healthier, and work harder when they choose goals aligned with their values. “The more a goal fits your personality, the more likely that its pursuit will be rewarding and pleasureful,” she writes. If you’re an introvert, it might not make sense to make a resolution that involves joining a group. But if you have a dominant personality, a goal of getting involved in local government could be perfect.
- Positive. A good goal helps you pursue a desirable outcome instead of avoiding an undesirable one. What do I mean? Well, a resolution can usually be framed as an approach goal (e.g., to be fit) or an avoidance goal (e.g., not to be fat). Studies show that people who pursue avoidance goals are less happy and achieve worse results than those who pursue approach goals. So, find a way to state your aim in a positive way — as a target you’re moving toward rather than something you’re trying to escape.
- Harmonious. All of your goals should be aligned, complementing each other to create unified action. In this way, they can work together to make each one easier to achieve. Conflicting goals cause frustration and stress. (During my RV trip across the U.S., I had two goals that didn’t work well together: I wanted to stay fit and I wanted to drink beer in every city I visited. You can guess how that worked out…)
- Flexible. Your goals will evolve over time. As your priorities change, your goals should too. Don’t abandon difficult goals, but be willing to alter direction as your circumstances and priorities change.
- Activity-based. Goals that involve doing rather than getting tend to make people happier and more motivated. For one thing, you’re likely to adapt quickly to whatever it is you achieve — whether it’s moving to Miami or buying a new computer — so that the anticipated pleasure fades rapidly. Plus, you have more control over whether you do something than if you obtain something. For example, it’s better to create a goal in which you aim to take 100 photographs per day (an action you can control) rather than one in which you aim to sell a photo to a national magazine (an outcome that may be beyond your reach).
That last bullet point is important and deserves additional clarification.
Remember how I’ve written in the past about developing an internal locus of control? One of the core ideas here at Money Boss is that you are the boss of you, and that means spending time and energy on the things you can actually influence while ignoring those that you can’t. When pursuing goals, I can’t determine the results; I can only determine my effort. Thus, it makes sense to set goals based on my actions (write two hours per day, go to the gym five times a week, max out my Roth IRA) instead of desired outcomes (get 100,000 email subscribers, bench-press my bodyweight, earn a 10% return on my investments).
I think of it like this: It’s better to prioritize habits over targets. You have more control over your actions than you do over the outcomes.
Why go to all this trouble when setting goals? Because if you’re careful to create good goals, you’ll get better results — with your life and your finances. And the better your results, the more likely you’ll be to continue working toward your goals…and your larger purpose. [Read more…]