We all know if we commit seriously enough to our goals to write them down, we’ll probably have a better chance of achieving them. But have you ever considered the multiplying and powerful effect of goals on our finances?

Mark and Cindy [names changed] came to us seeking financial advice. From the start it was clear they needed more than simply a review for their retirement and investment plan. Although they are halfway through their working lives and both earn good incomes, they had almost no savings. Each had significant credit card debt, as well as a crushing tax obligation that caused immense stress as they struggled to pay every April 15.

By their lack of progress you might think Mark and Cindy were not working together on their finances, but you would be wrong.

It’s true they never discussed money, their goals, or concerns. As a result, it was certainly the case that they didn’t work toward positive ends. However, they did work together. When one would splurge on a new computer, for example, the other partner would feel he or she had received “permission” to spend too.

In working with Mark and Cindy, we came up with clearly spelled-out realistic small goals on saving, debt payoff, and discretionary spending. One year later they not only had concrete goals they both bought into, they had made a significant start on building a cash reserve to eliminate the concern that money “isn’t available”; a few credit cards were paid off; and the tax situation was no longer a crisis because they had a jointly conceived plan in place for saving to pay them. More importantly, thanks to regularly scheduled meetings, Mark and Cindy began to have conversations about money for the first time in their marriage.

The positive attributes of goal setting are truly multiplicative. The simple act of writing down thoughtful and attainable goals, as well as action steps to achieve them, is much more than an exercise. Mark and Cindy’s financial position today is better by several times what it was a year ago, and several more times what it would have been had they remained stalled in their prior status quo. Their future outlook no longer is one of debt – though there is still some to deal with for some time yet. A successful financial future is now more than just a dream.

Consider also these side benefits of working on goals:
Real dialogue, based on facts not resentments or hidden agendas, leads to a mutual understanding of financial goals and less individual anxiety.

An outline of the steps to success provides ‘real’ measurements to show what will sabotage the plan. It doesn’t rule out the daily latte, but when the trade-offs between long-term financial success and short-term desires are clarified, bad habits are forced out because there is no longer room for them!

The satisfaction of meeting short-term goals successfully and knowing the long-term picture is on track motivates us to stick with positive financial habits.

Here are a few tips to help develop your written goals:

-Focus on the short to mid term. Goals aimed at more than five years from now require actions too but may seem either overwhelming or too uncertain. Even small steps in the right direction rather than toward debt will snowball and lead the way to financial success.

-Include target dates and amounts. If your goal is to start a cash reserve fund, answer these questions: What will you need in cash reserves? By when realistically can you have this accomplished? How much will you start saving on a periodic basis to get there?

-List the next action steps. What is the next step you need to take to make your goal a reality? If it is a longer term goal, list what you need to do in the short term (e.g., retirement goals: continue to save 10% of income and review asset allocation regularly).

It’s important to revisit and revise your goals and action plan periodically, and not just feel good about creating them to put them on a shelf. Visit the FPA’s Consumer Tools & Resources for worksheets and other tools to create and develop written goals. Working with your financial advisor can help create a realistic vision and plan, and make sure you stay on track toward your financial goals through all the curveballs life will throw your way.

The preceding blog was originally published by the Financial Planning Association®(FPA®). To view the original blog please visit the FPA Web site. (http://blog.fpaforfinancialplanning.org/2010/10/11/the-multiplicative-po...)

Author's Bio: 

Robert Schmansky has a wealth of personal finance experience in insurance, banking, professional money management, and holistic financial planning.

Rob began his career with a fee-only financial planning firm specializing in investment management and tax planning; he subsequently worked as an advisor for one of Michigan’s largest independent investment management firms before founding Clear Financial Advisors in 2011.

Rob earned a B.S. in human ecology from The Ohio State University, majoring in family resource management, and a M.A. in economics from Walsh College. His professional credentials include CERTIFIED FINANCIAL PLANNER™ (CFP®), Chartered Financial Consultant (ChFC), and Chartered Advisor for Senior Living (CASL). Rob is a participating member of the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA).

A lifelong student of personal finance with a commitment to consumer education, Rob has taught required courses for the CFP® examination as an adjunct instructor at Saginaw Valley State University. He has been a contributing writer to the FPA’s blog All Things Financial Planning; an investment expert for FiLife, a former Dow Jones/IAC joint Internet venture; and a writer for other publications including Yahoo! Finance.

Rob is frequently quoted in the media, including the Wall Street Journal, Dow Jones Newswires, MarketWatch, National Public Radio, and other industry and consumer outlets.

In his free time, Rob enjoys coaching youth lacrosse, reading fiction and books on historical people and events, and jogging.