Weekend Reading: Master List Of Financial Goals Edition

Most of my work as a financial planner boils down to helping clients use their resources to achieve their financial goals over time. But where do those goals come from? How do we know they’re the “right” goals? 

The team at PWL Capital dug into the research around goal setting and found that, “people are empirically deficient at identifying what their objectives are,” and that, “participants consistently omit nearly half of the objectives that they later identify as personally relevant.”

Basically, we don’t think broadly enough about how many goals we’d like to achieve, and we don’t think deep enough to articulate which goals are the most meaningful to us and if any of those goals contradict other goals.

One example is a prospective client whose main objectives were to reduce his tax burden and to avoid OAS clawbacks. Yet he also enjoyed his work and planned to continue earning significant income well into his 70s.

Another prospective client wanted to “die with zero”, but also wanted to build a portfolio of income properties.

To help increase the probability of generating a more relevant list, research from Bond, Carlson, and Keeney suggest the following exercise:

1. Independently generate a list of objectives without outside help.
2. Approximately double the number of objectives that were initially generated.
3. Consult categories that objectives for the decision may fall into.
4. If it exists, consult a “master list” of objectives for the decision; this should only be done after completing the first three steps.

Master List of Financial Goals

PWL conducted a survey, collecting responses from their Rational Reminder podcast listeners, with the objective of creating a master list of financial goals. Ben Felix, the head of research at PWL, recently posted a summary of their findings.

The number one goal, by far, was to become financial independent – where work is optional. Anecdotally, that’s the most common goal I hear from my clients as well.

Here are the top 10 goals from the master list:

1. Being financially independent – work is optional
2. Feeling financially secure
3. Affording travel / leisure time / experiences with family
4. Maintaining physical health through sleep, diet, and exercise
5. Financially supporting my community or causes that are important to me
6. Finding and affording engaging hobbies
7. Assisting children with education costs / early adulthood setup
8. Owning a home and affording its operating costs
9. Having the ability to be generous with loved ones
10. Avoiding the hedonic treadmill, but not over-saving (“enough”)

Other goals that I found interesting (but that appeared lower in the master list) included:

• Finding engaging work and being in a financial position to pursue it
• Outsourcing unpleasant tasks
• Raising financially literate and responsible children

As a planner, I’m happy to see this research and plan to use it to help my clients think about their own financial goals. It’s true that we don’t think broadly enough about all of the goals we want to achieve – too often we focus on the one or two burning questions occupying our minds at the time.

We tend to just arbitrarily want “more” without stepping back to think about how we’ll use our financial resources to fund a good life. 

My takeaway is that it’s hard to come up with a list of financial goals on the spot, but by thinking more broadly about what we want out of life, writing down those objectives (then trying to double the number of objectives), and then consulting a master list of financial goals, we can better articulate our own goals and how to use our financial resources to support that vision.

I also find it helpful to come up with a list of anti-goals – what you don’t want your life to look like now and into the future.

Readers, anything to add to the master list of financial goals?

This Week’s Recap:

I managed to write one post last week when I looked back at the last 11 years of home ownership and wondered if my house was a lousy investment.

Many thanks to Rob Carrick at the Globe and Mail for featuring that article in his latest Carrick on Money newsletter. Always appreciated! I also appreciate how kind you are in the comments section compared to G&M readers – so thanks for that! 

Promo of the Week:

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Inflation is still running higher than usual, so it’s more important than ever to find ways to squeeze more savings out of your purchases. Rakuten has access to more than 750 stores, including The Bay, Sport Chek, Canadian Tire, Old Navy, and Sephora.

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It’s not just shopping – Rakuten also has cash back on credit card sign-ups as well. I have my eye on a new Scotiabank offer where you’ll get $150 cash back when you sign up for either the Scotia Momentum Visa Infinite, the Scotia Passport Visa Infinite, or the Scotiabank Gold American Express card.

Best of all, those three cards are all “First Year Free” with this promotion and have generous and easy to attain welcome bonuses on top of the $150 cash back from Rakuten.

Weekend Reading:

It has been a rough year for the classic 60/40 portfolio. Nick Maggiulli explains how it makes a comeback.

Why a highly diversified portfolio, even one that is down right now, is like having ground beneath your feet while less diversified investors are skating on thin ice.

Getting a head start on tax loss selling? Jamie Golembek says to beware of the superficial loss rule, currency implications, and more.

The most important decisions in your life may be whether to marry, who to marry, and whether to have kids. But none of those topics are taught in school. Morgan Housel’s latest looks at things that are very important but hard to teach.

Here’s the messy true story of the last time we beat inflation.

Rob McLister says mortgage shoppers are snapping up short-term fixed rates right now, and says, “that is exactly how yours truly would play it – assuming I were getting a mortgage today.”

Canada’s oligopoly of the skies is at it again, as Air Canada and WestJet launch a lawsuit to overturn orders to compensate passengers for cancelled flights. Good grief.

Gen Y Money travel hacked her way to the Maldives. It’s on my bucket list.

Finally, author Mike Drak says financial planning needs to be broadened to include longevity planning—how people can live their best life for as long as they can. 

Mike also wrote a piece in MoneySense about what a retirement plan looks like today:

“Your first life was a quest for success and money; your second life is a quest for meaning and significance. If you approach it right, you can recreate the excitement and possibility you felt back in your twenties when you first started out. Remember how that felt?”

The above article was excerpted from Longevity Lifestyle by Design (September 2022). The PDF version of the book is available to download for free, or you can order the paperback version on Amazon.

Mike says if you are willing to buy a copy for $12.99 on Amazon and post a comment below, “I will send a free printed copy to the person of their choosing.” Thanks, Mike!

Have a great weekend, everyone!