Martin Hawes: Written goals the way to go

For years I have known New Year's resolutions are a waste of time. Even as a small child I knew they were soon abandoned and forgotten. Yet I have long set goals for myself and know they are very powerful for achieving important things.

The difference between resolutions and goals is that one is a statement of what you are going to do (the resolution), while the other is your desired outcome (the goal). A statement such as "I will spend less and live to a budget" is negative, and will not be as successful as "I will have $5000 in the bank by the end of the year". The goal is worded positively - a statement of where you want to be and what you want to have is a far greater motivator. Sure, you are still going to have to live to a budget to have the $5000, but keeping that attractive outcome firmly in your sights is more likely to be effective.

We all need help to do the hard stuff. Whether it is the diet, to get fit or have better finances, the best help you can have is a goal framed positively. A bald statement of what you will not do is not motivating. When I am helping clients with their finances there are many things to consider - investments, insurances, debt reduction and so forth. However, I think the most important and valuable thing that I do is to establish their long-term goals to give them a focus for what it is they are trying to achieve.

This may be something like: "We will have a net worth of $750,000 by 2015" or "We will have a mortgage-free house by the time we are 45".

Goals have to be specific and measurable - they are numeric and a hard and fast reflection of whatever it is that you want. They also have to be achievable; there is no point in having a goal that is arbitrarily plucked out of the air. Goals need to be relevant to the things you want in life and should have a time limit for when they will be achieved.

Most importantly, goals should be in writing. A goal committed to paper cannot be fudged - you cannot fib to yourself about whether or not you achieved a written goal. For most of us, this will mean we will do whatever is necessary to realise our ambition.

Resolutions simply don't work. Decide on the result you want: whether it is to be healthier, slimmer, have a happy retirement or have more money. Put it into a form so you will know whether you have achieved it. Write it down and keep it somewhere you can see it.

Martin Hawes is a financial adviser. His disclosure statement can be found at www.martinhawes.com