The Neuroscience of Goal Setting
The first agenda item when I meet people for the first time is often “What are your goals?”
At least half the time I am not given a goal. I am often given a vague objective, like I want to be financially independent. Sometimes, even worse, I am given a strategy, like I want to set up a self-managed superfund and buy a property.
Financial Goals need to:
1. Specifically relate to improving your lifestyle now or in the future.
2. Have a cost, and timeframe attached
3. Speak to the part of your brain that makes decisions
Why? Because if they don't you probably will lack the motivation required to change your actions! At the end of the day goal setting only adds value if it causes a change in action.
Specifically related to improving your lifestyle now or in the future.
Write down your list of goals. Then for each goal ask “why?” Why do you want a self-managed superfund with a property? Is it to have enough money to be comfortable when you stop working? The ends not the means is what you should be focusing on at this stage. But you need to dig a little deeper.
Have a cost, and time frame attached
For the example above, you need to define comfortable and set a date for retirement. Every goal need to be specific and measurable. So, your goal might be to retire on $80,000 a year at age 60, or to travel to Italy in 2020 costing $20,000.
Speak to the part of your brain than makes decisions.
Neuroscientists say up to 95% of our decisions are made by our subconscious and our conscious brain merely justifies the choice. This is why we often set logical goals and then don’t change our action to achieve them. The subconscious does not care about your silly logic, it only cares about feeling, specifically pain and pleasure.
If your goal requires a change in action you need to drill down into the feelings that would come along with achieving vs not achieving that goal.
If your goal is to retire on $60,000 but you are struggling to get the motivation to start saving, then spend a week with an age pensioner on $23,000 a year and feel what life is like.
I can almost guarantee the next time the subconscious has a decision about saving vs overspending, you will find it very easy to decide to save.
Or, if your goal is travel, imagine being able to experience different parts of the amazing world we live in.
Whatever your goal, think of how it would feel to achieve it, and how it would feel not to achieve it.
P.S. neuroscience also teaches us the goals that make us happy are not “things” but generally fall into one of the following categories:
1. Improving your relationships: eg family holidays and having people over for dinner
2. Helping others: eg. Funding your children’s education or charitable donation (of time or money)
3. Enabling your passion or hobby: This is different for everyone.
If you would like to have a discussion about your goals and actions you can look at taking to achieve them then I am happy to conduct a free 30 minute phone consult. Book your consult here.