CHAPTER 2
The Gift of Purpose
PERSONAL PRINCIPLES AND GOALS
Most of us do not achieve our goals, financial or otherwise. The primary reason we fall short is not that we have unrealistic goals or a lack of ability to achieve them. It is because we have not completed an exercise of far greater importance than goal setting. Prior to establishing goals, we must understand the stuff in life that we want to be about. Stephen Covey1 calls them values, Ben Franklin called them virtues, but we’ll call them Personal Principles. What are the underlying principles that guide you, and how do you want to make a mark on this world?
Ultimate Advice
After his 12-month journey in The Ultimate Gift, Jason Stevens concludes, “I understand the purpose for my life.” It need not take 12 months to get there, but without a better understanding of our purpose, it’s exceedingly difficult to draft an excellent financial plan.
Establishing goals that are not supported by our Personal Principles can only achieve one of two dissatisfactory results. Either we feel the inadequacy of falling short of our aim, or we change our value system to conform to the goal. For example, if I’m reading a financial magazine that tells me that I need $3 million dollars saved to retire comfortably by the age of 55 and I take the steps necessary to meet that goal, I may work two jobs that I hate and be perpetually absent from family functions and my kids’ events. If “Being present physically, intellectually, and emotionally for my family” is one of my Personal Principles, you can imagine how difficult it would be to achieve the early retirement goal without compromising the underlying value. Goals that are prescribed to us by a parent, teacher, book, or financial advisor and are not supported by our Personal Principles have little chance of success. Conversely, when we align our goals in life with our Personal Principles, we have a very high success rate.
Ah . . . success. Is that ultimately what we desire? I don’t think so. We long for fulfillment and contentment. Remember our definition of the word wealth? In the financial services industry, on television, in books—even textbooks—wealth means one thing: dollar signs! If this is true, many among us would never have the opportunity to be wealthy and, therefore, would not enjoy the satisfaction of being financially “successful.”
Stanley and Danko did an excellent job in their classic, The Millionaire Next Door2, helping us better understand what financial success looks like. Their conclusion is that it doesn’t really look any different from financial mediocrity. Most millionaires don’t actually fly around in corporate jets and drive Maseratis. They drive pickup trucks and live in nondescript houses and they don’t see the benefit in bidets. They’re successful in their dealings with money because they’ve put money in its rightful place as a means to an end, not the reverse. Success, then, is a natural by-product of a contented life lived fulfilling your unique purpose.
Ultimate Advice
The great and glorious masterpiece of man is how to live with a purpose.
Michel De Montaigne
Consider the slight difference in the two words compelled and impelled. The former you hear often, but not so much the latter. To be compelled is to have an external force move us to action. “I was compelled by my self-righteous sister to give up the family party on Thanksgiving to serve at the local homeless shelter.” One who is impelled acts on a force that comes from within. “I was impelled to sacrifice food and football this Thanksgiving and, instead, serve those at the local homeless shelter who don’t have the privilege of choice.”
You’re the only you, but most of us are so busy fulfilling an endless series of external requests on our time, talent, and treasure that we never take the opportunity to reflect on what our purpose really is. As often as is possible, be impelled to fulfill your own purpose in life, not compelled to live out someone else’s.
Timeless Truth
Money will not make you happy. I hasten to add that neither will poverty make you happy.
In a recent study on happiness, it was determined that, beyond basic food, clothing, and shelter (approximately $50K in the U.S.) adding more money to the equation did not necessarily make one happy. Money without purpose is like fuel without a destination. It is useless if not dangerous to have around if you don’t have a purpose.
I have written a dozen books, and I will never forget the day when an eminent financial planner and estate attorney called me to compliment me on my “book on finance.” He said he had given over 1,000 of the books away, and he wanted me to know how much the book meant to him. I was flattered but baffled at the same time. I was glad that one of my books had found meaning in his life and in the lives of the clients he served; however, I wasn’t aware that I had written a book on financial planning or estate planning.
When he told me he was referring to my book The Ultimate Gift, I had to stop and think about why that book was considered by this renowned professional to be a breakthrough in estate and financial planning.
The Ultimate Gift, and the subsequent movie from 20th Century Fox based on the book, is a story about life, principles, goals, and values. Money is not the major theme of The Ultimate Gift or the sequel book, The Ultimate Life. I only used a billionaire character in the stories to try to put money into perspective. Then I realized the ultimate lesson about money is not about money. It’s about life. The lesson is as personal and individualized as you and I.
We cannot do planning by looking at a financial statement any more than we could fit you with the perfect pair of shoes by talking to you on the telephone. Always remember, when you’re talking to a financial planner, lawyer, CPA, insurance salesperson, banker, or anyone else you call upon to help you with your personal finances, the most they can accomplish is to make your money do what you want it to do in the context of your life. Letting them drive your future is like letting the gas station attendant tell you where to drive your car.
Resource without direction, wealth without planning, and money without destiny is the height of human folly.
Jim Stovall
Once you have established your Personal Principles, it is then time to move on to setting your goals. Without goals, life is lived at the behest of a collection of circumstances. You’re compelled to do so much by so many outside forces that you’ve no time for your personal, purposeful impulsions.
In order for a goal to be valid, it must meet the following four criteria: specific, measurable, attainable, and most importantly, meaningful.
“Go to the gym” is a specific enough goal, but without determining how many times per week you intend to go to the gym, the goal is not measurable. “Go to the gym seven days per week” is both specific and measurable, but with a spouse and three small children, it may not be attainable. And without a meaningful purpose, such as improving my self-image or relieving stress, the most specific, measurable, and attainable physical fitness goal will go on unfulfilled. The meaning for your goals is found in your Personal Principles.
Ultimate Advice
Another personal productivity guru whom I respect a great deal is David Allen, the author of Getting Things Done: The Art of Stress-Free Productivity.3 David suggests that we often can’t focus on our goals and values very well until we remove the layers of physical and mental clutter from our realm. He suggests we need to get a load of to-dos out of the way before we can really focus on bigger picture items like vision and purpose. I don’t disagree with Allen. Especially since I put myself through the recommended decluttering process in his book, Getting Things Done, I have indeed found more time and space for creativity and vision casting. So if you’re struggling to develop your Personal Principles and Goals because of a pile of to-dos staring at you, take Allen’s advice and commit a Saturday to vetting your physical and e-mail in-boxes with his “do it, delegate it, defer it, or drop it” methodology.
There are few areas in which this practice of understanding your own Personal Principles and Goals is more vital than in your personal finances. Many of the people who render financial advice don’t understand, or seek to understand, you and your Personal Principles. How then could they make the appropriate recommendations? They don’t! And this is evidenced not in the financial plans they write, but instead in the rate of their successful implementation.
The financial planning/psychological duo of Rick Kahler and Ted Klontz posit that over 80 percent of the financial planning recommendations that are made are not implemented!4 Is this because the people who have paid a financial planner to tell them what to do have somehow lost the motivation to do so? In some cases, yes, but in many cases, the planners are at fault for walking into their interaction with a preconceived list of recommendations (that work for them or someone like them) already on the tip of their tongue.
Financial planners think, talk, and act differently from most of their clients. They accidentally (and sometimes purposefully, as a sales tactic) use industry terminology that only makes sense in technical circles, shaming clients into nodding through meetings, too scared to show their justifiable ignorance and ask, “I’m sorry, what again is a QTIP trust and how is it used?” Or maybe even, “What is the difference between growth and value? Absolute or relative return? A stock or bond? A mutual fund?”
Economic Bias Alert!
Your financial planner has an economic bias that inevitably inhibits you from going through a thorough analysis of your values and goals. Most financial planners don’t get paid until very late in the optimal financial planning process. This is especially true of the majority of advisors who work for proprietary product distribution companies—banks, brokerage firms, insurance companies, and even independent broker/dealers.
You see, they don’t get paid until you implement the recommendations in your financial plan . . . which doesn’t happen until you have chosen to accept a planner’s recommendations . . . which doesn’t happen until you’ve received the planner’s recommendations . . . which shouldn’t happen until the planner has a very good understanding of your goals . . . which shouldn’t happen until you’ve determined your foundation for those goals—your values.
The natural result is that most financial planners go into every meeting with a cookie-cutter mentality; in essence, they already know the goals you “should” have and the steps that are required to meet your (their) goals. This doesn’t make planners a bad people, but if planners are not going to get paid until you buy something, don’t you see how they may be inclined to prefer to see that come to fruition sooner rather than later?
The solution? If you’re working with a planner who seems to be putting his or her own goals above yours, make a new goal to find a new financial planner.
Financial endeavors are especially hollow without goals that meet each of the four criteria. Saving for retirement in a 401k or IRA for every generation from the Baby Boomers on has become as common as brushing your teeth or tying your shoes, but these accounts are notoriously under-funded and poorly managed because the goals are not clear. Why do I want to kiss goodbye a meaningful part of every paycheck that could otherwise be spent? If you don’t know the answer to that, you’ll never be a good retirement saver. Or, if you deprive yourself and your family of every comfort, convenience, and luxury for the purpose of saving as much as you possibly can for retirement, you may be left with a pile of cash with no earthly idea how to spend it and no one with whom to spend it.
Timely Application
Personal Principles and Goals
This Timely Application also qualifies as Timeless Truth. Benjamin Franklin is a legendary historical figure for many reasons—not all of them noble. But there is little doubt that his was a life of purpose. He deliberately set forth to accomplish certain things, yes, but his accomplishments sprang from what he referred to as his personal virtues. These were the values and character traits he hoped would mark his accomplishments on this earth. I encourage you to read these not to make them your own, but to get an idea of how to discern your own. If you try to make Ben Franklin’s virtues and goals your own, you’re likely to fall short of your unique potential and purpose, but the study of the principles that marked the life of this great man are sure to inspire as well as entertain:
Ben Franklin’s 13 Virtues
1. Temperance: Eat not to dullness and drink not to elevation.
2. Silence: Speak not but what may benefit others or yourself. Avoid trifling conversation.
3. Order: Let all your things have their places. Let each part of your business have its time.
4. Resolution: Resolve to perform what you ought. Perform without fail what you resolve.
5. Frugality: Make no expense but to do good to others or yourself: that is, waste nothing.
6. Industry: Lose no time. Be always employed in something useful. Cut off all unnecessary actions.
7. Sincerity: Use no hurtful deceit. Think innocently and justly; and, if you speak, speak accordingly.
8. Justice: Wrong none, by doing injuries or omitting the benefits that are your duty.
9. Moderation: Avoid extremes. Forbear resenting injuries so much as you think they deserve.
10. Cleanliness: Tolerate no uncleanness in body, clothes, or habitation.
11. Chastity: Rarely use venery but for health or offspring; never to dullness, weakness, or the injury of your own or another’s peace or reputation.
12. Tranquility: Be not disturbed at trifles, or at accidents common or unavoidable.
13. Humility: Imitate Jesus and Socrates.
http://www.earlyamerica.com/lives/franklin/chapt8/
Deliberate over that which you want to mark your life. Write down a word or phrase that will be your Personal Principle, and then give a sentence or two of explanation. These are yours, but I encourage you to share them with a good friend and your spouse, if applicable. (One of the nuanced difficulties and benefits of marriage is the necessity of allowing your Personal Principles to be folded into those of your spouse. If your spouse is a willing participant, encourage him or her to complete this exercise as well to develop a set of Unifying Principles for your family.)
Your goals—especially your financial goals—may be better informed when you complete this book, but practice now writing down a few goals that meet the specific, measurable, attainable, and meaningful criteria, then come back to them after completing the book. Financial goals will then be broken down into specific steps to meet those goals in your Action Plan.
Visit www.ultimatefinancialplan.com to find templates to use in creating your own Personal Principles and Goals.
Tim Maurer
What does this discussion of Personal Principles and Goals have to do with money? Everything! In our modern times, money is the facilitator of virtually everything we do. If, like Franklin, frugality is something you want to mark your life, it will impact how and when you spend money. If health and exercise is a value of yours, you’ll be required to purchase running shoes, athletic apparel, and likely even make a monthly expenditure for a local health and fitness club. If artistic expression is a Personal Principle of yours, you’ll be purchasing a musical instrument or easel and paying for lessons. If your aim is to serve the underserved in your community, money will aid you in your pursuit. A prerequisite for good money management is an understanding of your Personal Principles.
Ultimate Advice
Not only must we be good, but we must also be good for something.
Henry David Thoreau
The only guarantees in financial planning are surprises, change, and failure. Successful application of your Personal Principles and Goals requires three important counteragents: margin, flexibility, and grace.
Surprises require margin.
Change requires flexibility.
Failure requires grace.
Life is not linear or predictable. In actuality, it’s a downright mess! Without margin in your Personal Financial Statements, surprises can bury you, leading to revolving debt, foreclosure, and bankruptcy. Since the only constant in personal finance is change, it requires us to be flexible and adjust to the inevitable changes in our careers, government, and personal lives. Remember, that which is not flexible in a changing environment breaks. The final guarantee—failure—is a tough one to swallow. Once we’ve purposed ourselves to accomplish a goal, we don’t want to acknowledge the possibility of failure, but if we don’t give ourselves grace when we do fail, we’re unlikely to set another lofty goal.
Ultimate Advice
Jason Stevens’s journey in The Ultimate Gift didn’t even begin until he’d reached the depths of abject failure.
Once you have laid the foundation of your Personal Principles and Goals, you are ready to start crunching some numbers. We’ll begin with an examination of the three Personal Financial Statements in the next chapter.
1. Dr. Stephen Covey is the author of many books, including The 7 Habits of Highly Effective People (New York: Free Press, 1989, 2004), and served as a pioneer in personal and corporate organization and effectiveness. As the cofounder of FranklinCovey, he helped make the FranklinCovey Planner a ubiquitous sign of organization among professionals.
2. Thomas Stanley and William Danko, The Millionaire Next Door (New York: Pocket Books, 1996).
3. David Allen, Getting Things Done (New York: Penguin Books, 2001).
4. I participated in several educational sessions with Dr. Ted Klontz and Rick Kahler in which they shared this amazing (and frightening) statistic. They, along with Brad Klontz, have produced an immensely helpful book for financial planners, life coaches, and psychotherapists specializing in money issues titled Facilitating Financial Health (Erlanger, KY: The National Underwriter Company, 2008).