Missing Your Financial Goals — Lessons I Learned in Dealing with Failure

I’m stoked. Like I do the last Friday of every quarter, I logged onto my accounts today and reviewed where I stand financially. My net worth has reached a new all-time high. While this is exciting, this milestone comes about two years too late. You see, at the start of each year, I set a goal for where I want to be financially by the end of the year. My current net worth is what I anticipated it to be at the end of 2022! What gives? Well, no one can predict the future. You never know what the markets are going to do. The best I can do is estimate how I think the year is going to go and hope for the best.

I don’t pull my financial goals out of my ass willy nilly. I do have some strategy. There are some figures that are fairly easy to predict. For example, I know my starting balance for the year. I also know how much I set aside each month to invest. Predicting what direction the market is going to move is a completely different story. The market was on a roll going into 2022 that it felt like a runaway freight train. Boy, was I wrong. 2022 ended up being a shit year for everyone’s portfolio. Stocks were down, crypto was down, and inflation shot through the roof.

If we’re lucky, we get about 80 years (hopefully more) on this floating rock. Your financial journey will be a long one. It’s impossible to go that long without experiencing a financial crisis (or two or three) over your lifetime. Building your wealth will never be a linear path. Instead, growing your net worth is like riding a roller coaster. Sometimes you climb steadily for months and months and out of nowhere you plummet down a steep drop. The excitement you feel on the way up can quickly turn to wanting to puke your brains out when you hit that corkscrew turn or loop.

The most important thing is how you deal with missing your financial goals. It’s too easy to throw in the towel and give up. That’s the reason why so many people fail to stick to their financial goals and reach financial independence. That’s not going to be you. My goal is to share my experiences so that others can learn from my mistakes and how I learned to cope with the failures that come with working toward financial stability.

1. Past History Doesn’t Guarantee Future Results

The first lesson you need to soak up and embrace fully is the understanding that what has happened in the past doesn’t guarantee future results. Just because a certain stock has been climbing for decades doesn’t mean that it will continue forever. I often swear by the historical average of the S&P 500 which has produced about 10% returns every year for the last 50 years. There is no guarantee that it will continue to do so next year or next decade.

This might seem like common sense, but believing that your investing strategy is bulletproof is careless. Investing will always carry some form of risk. If you own a business, a major product safety recall could destroy your company. If you own a blue chip stock, the company could be replaced by a new technology. By realistically acknowledging the risks and imagining the worst case scenarios, you can avoid the shock and devastation when the worst actually happens.

I’m not saying that you should be afraid of investing. Fear is one of the main reasons why people stay poor because they don’t take any risks. However, painting an unrealistic picture of making millions of dollars with zero setbacks is naïve.

2. Leave Some Wiggle Room in Your Goals for Setbacks

There is nothing wrong with being hardcore aggressive with your goals and pushing yourself to the max. But you shouldn’t set goals that are only realistic if the planets and stars align just perfectly. At the same time, setting mediocre goals is setting yourself up for mediocre results. Weak goals give you permission to slack off. Personally, I think the best option is to instead set a range for your financial goals. This will give you a better view of where you might realistically end up. Feel free to set your upper limit as the best case scenario. I usually set this at my best case scenario plus 5% to 10% because I’m always looking for new opportunities to build my wealth faster such as getting a promotion, expanding an existing side hustle, or taking advantage of an unexpected cost savings.

For the lower limit, this will be where you will realistically end the year assuming you will have a mix of wins and losses. Usually, this will be about 80% of your best case scenario. So, instead of anticipating a net worth increase of $20,000 this year and being disappointed when you only achieve $17,000, you can set your target range of $15,000 to $20,000. At the end of the day, progress is progress. I’m happy if any of my clients make progress, especially in a tough year.

3. Reframe How You View the Setback

Missing your financial goal sucks. But you don’t have to wallow in self-pity. Instead, I’ve learned to reframe the setback and look for the opportunities to improve my financial standing instead. For example, your portfolio might be down $100,000 (ouch!), but is that really so bad? First, the market naturally goes through cycles of ups and downs. Unless you have sold some of your investments, you haven’t actually lost anything. Let’s say you have 100 shares that trade for $100 each (total of $10,000). The market goes down and those same stocks are now worth $80? What did you lose? Absolutely nothing. You still have 100 shares of the company.

Another thing to consider is that now you have the opportunity to buy this stock at a deep discount. Instead of buying 10 shares a month, you can now afford to buy about 12 of them. A down market is the perfect opportunity to really ramp up your investing without actually digging deeper financially.

Usually when the market is down, I try to look for opportunities to increase my investing more than usual because I know that when the market returns to normal, my net worth will explode as a result. While I use to fear market downturns, I now understand that market upsets are a blessing in disguise. The question is whether you have the stomach to hold out and ride the bear.

“The time to buy is when there is blood in the streets.”

~ Nathan Rothschild, 19th century British financier

4. Understand that Life Happens

Missing your financial goals isn’t always your fault. Major life events can happen unexpectedly. Maybe your family pet got sick and required hospitalization. Maybe the manufacturing plant where you work closed down and got moved overseas. Maybe your grandparent passed away and you had to buy plane tickets for the whole family to attend a funeral on the other side of the country. This is just life.

When dealing with these sorts of setbacks that cause you to miss your goals, you need to figure out how to separate what is and is not within your control. If you miss your financial goal because of something outside of your control, cut yourself some slack and pick yourself back up. If you missed your financial goals because you decided you just had to have that new Mercedes, that’s a completely different story.

It’s important to always reflect on what went wrong and see if there is something that you could have done differently. These are valuable lessons that we all unfortunately must learn from time to time. I won’t judge you for making mistakes. They happen to the best of us. But, you must learn from your mistakes and figure out how to never let that happen again. Life is all about learning and growing.