Three Obstacles to Reaching Your Financial Goals

Three Obstacles to Reaching Your Financial Goals

by Jerry Dorfman, CPA, PFS

We all have unique and personal definitions of what financial success means – from simply having enough money in retirement to leaving significant assets to future generations. But no matter the goal, three big obstacles may stand in the way. Recognizing them is the first step in overcoming them.

  1. You need a plan. There’s a nice song lyric in the musical South Pacific: “If you don’t have a dream, how you gonna have a dream come true?” Replace dream with plan, and you have the biggest financial obstacle for most individuals. Without taking the time to set long-term goals and develop a cohesive plan to reach them, managing finances is a big challenge.

A good long-term plan guides decisions about savings, spending, business ownership, investing, tax planning, wealth transfer, philanthropy and much more. Realistic planning sets priorities, clarifies how your assets should be invested, and determines when retirement makes sense. Without a plan every decision is something of a guess, and achieving big goals becomes a matter of chance.

  1. Life gets in the way. Making a plan is a huge step in the right direction, but sticking to the plan presents another major test. In my work with entrepreneurs and professionals over the last three decades I find many people simply get so caught up in the rigors of family and career that they lose track of their plans. They skip a few years of retirement plan contributions. They have a wonderful vacation on the Cape and decide to buy a pricey getaway home. They have a setback at work or a health problem in the family that puts the financial plan on the back burner.

Being distracted by real life is completely understandable and normal. The question is not so much whether you will be distracted, but how quickly you can get back on track in terms of savings, spending and investing.

  1. Emotion leads you astray. Let’s say you have a broadly diversified portfolio of stock and bond mutual funds. You stick to funds with low fees. You avoid trading to keep down transaction costs. You make all these smart moves, but then you see a market pundit hyping the prospects for XYZZ stock and you want in. Or you have a hunch that the long bull market is ending so you decide to go to all cash and wait for the correction. Or you put all your available cash into the fund in your portfolio that had the best return last quarter.

There’s a lot of math and financial theory in my work, but I also spend a lot of time counseling clients to ignore their fears, impulses and, especially, the predictions of commentators. No one knows what XYZZ or the overall market will do in days, months and years ahead. Changing your portfolio based on emotions is much more likely to damage than enhance your chances of meeting long-term goals.

The three obstacles described here are significant foes one at a time, and cumulatively they can definitely put up a good fight. I suggest working with a financial advisor to help level the playing field.


Jerry Dorfman, CPA, PFS, is co-founder and principal of Convergence Wealth Advisors in Providence, RI.

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