Goal Setting & Prioritization: A Client Guide

What is Goals-Based Financial Planning?

Goals-based financial planning is a personalized approach that focuses on helping you identify, prioritize, and achieve your unique financial objectives. Rather than simply aiming for the highest investment returns, this method aligns your financial strategies with your specific life goals—such as buying a home, funding education, retiring comfortably, or leaving a legacy.

Why Use a Goals-Based Approach?

- Clarity & Motivation: Clearly defined goals give you a roadmap and keep you motivated.

- Personalization: Plans are tailored to your needs, not generic benchmarks.

- Better Decision-Making: Every financial choice is evaluated in the context of your goals.

- Progress Tracking: You can measure your success by how close you are to achieving your goals, not just by investment performance.

Seven Steps to Goals-Based Financial Planning

1. Identify Your Goals: List out your short-, medium-, and long-term goals. Be specific—think about timing, cost, and importance.

2. Prioritize Goals: Not all goals are equally urgent or important. Rank them to focus your resources.

3. Assess Your Current Situation: Review your income, expenses, assets, and liabilities to understand your starting point.

4. Develop a Plan: Map out how much you need to save or invest for each goal, and create a tailored strategy.

5. Implement the Plan: Put your strategy into action by setting up accounts, making investments, and automating savings.

6. Monitor Progress: Regularly review your progress and adjust for life changes or market fluctuations.

7. Adjust as Needed: Life circumstances and priorities can change—update your plan accordingly to stay on track 

(**Reference:  [Seven Steps to Goals-Based Financial Planning**]Article Link

Setting SMART Goals

When defining your goals, use the SMART framework:

- Specific: Clearly state what you want to achieve.

- Measurable: Quantify your goal so you can track progress.

- Achievable: Make sure it’s realistic given your resources.

- Relevant: Ensure it aligns with your values and priorities.

- Time-bound: Set a target date for achievement 

([**SMART Goals: A How to Guide**]LINK

Example of Goals-Based Planning in Action

Working with a Financial Advisor

A financial advisor can help you:

- Clarify and prioritize your goals

- Develop a comprehensive, personalized plan

- Adjust your plan as your life changes

- Keep you accountable and on track 

([**Reference: The Power of Goals-Based Financial Planning**] LINK

By focusing on your unique goals and using a structured planning process, you can take control of your financial future and make informed decisions that truly matter to you.

Ranking & Prioritizing Goals

When you have multiple financial or life goals, ranking and prioritizing them is crucial to ensure your resources are allocated effectively. Here’s how you can do it:

1. List All Your Goals

Start by writing down all your goals—short-term (within 1 year), medium-term (1–5 years), and long-term (5+ years). Examples include building an emergency fund, buying a house, saving for retirement, or funding a child’s education.

2. Clarify and Specify Each Goal

Use the SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound) to define each goal clearly. This helps in understanding exactly what you’re working toward.

3. Assess Importance and Urgency

Evaluate each goal based on:

- Importance: How critical is this goal to your well-being or happiness?

- Urgency: How soon does it need to be achieved?

4. Use a Prioritization Framework

Several proven methods can help you rank your goals:

- Value vs. Effort Matrix: Place goals on a grid comparing their value (impact) to the effort (resources/time) required. Focus first on high-value, low-effort goals ([**see this technique**](https://www.savio.io/product-roadmap/prioritization-frameworks/)).

- Weighted Scoring: Assign scores to each goal based on criteria such as importance, urgency, and impact. Sum the scores to rank your goals ([**weighted scoring explained**](https://cfoperspective.com/4-proven-ways-to-prioritize-your-goals-and-tasks/)).

- MoSCoW Method: Categorize goals as Must have, Should have, Could have, or Won’t have right now ([**MoSCoW explained**](https://www.usemotion.com/blog/workload-prioritization)).

- Paired Comparison Analysis: Compare each goal against every other goal to see which is more important, then tally the results ([**paired comparison method**](https://cfoperspective.com/4-proven-ways-to-prioritize-your-goals-and-tasks/)).

5. Rank Your Goals

Based on your chosen method, create a ranked list of your goals. Focus your resources (money, time, energy) on the highest-priority goals first.

6. Review and Adjust Regularly

Your priorities may change over time due to life events or shifting values. Review your goals and their rankings periodically and adjust as needed.

---

Example Table: Weighted Scoring

Prioritizing your goals ensures you focus on what matters most and make the best use of your resources.

For more detailed prioritization techniques, explore this [guide to prioritization techniques](https://www.naccho.org/uploads/downloadable-resources/Gudie-to-Prioritization-Techniques.pdf).

Assigning Risk Scores to Goals: A Step-by-Step Guide

Assigning risk scores to your financial goals helps you understand which goals are most vulnerable to uncertainty and which require more attention or contingency planning. Here’s how you can do it:

1. Identify Risks for Each Goal

For every financial goal, consider potential risks that could prevent you from achieving it. Common risks include:

- Income loss (job loss, business downturn)

- Unexpected expenses (medical, home repair)

- Market volatility (investment losses)

- Inflation

- Health issues

2. Define Risk Criteria

Most risk scoring models use two main criteria:

- Likelihood: How probable is it that something will hinder your goal?

- Impact: If it happens, how severely will it affect your ability to achieve the goal?

3. Assign Numerical Scores

Use a simple scale (for example, 1–5 or 1–10) for both likelihood and impact:

- Likelihood: 1 (very unlikely) to 5 (very likely)

- Impact: 1 (minimal effect) to 5 (catastrophic effect)

4. Calculate the Risk Score

Multiply the likelihood and impact scores for each goal:

> Risk Score = [Likelihood x Impact]

This gives you a risk score for each goal, typically ranging from 1 to 25 (if using a 1–5 scale). Higher scores indicate higher risk and may require more attention or mitigation strategies 

([**see risk scoring methodology**](https://drata.com/grc-central/risk/risk-assessment-methodologies)).

5. Prioritize Based on Risk

Rank your goals based on their risk scores. Focus on addressing (mitigating, insuring, or planning for) the highest-risk goals first 

([**risk assessment best practices**](https://www.flagright.com/post/how-to-do-risk-scoring)).

6. Review and Update Regularly

Risk profiles change as your circumstances or the external environment changes. Review your risk scores at least annually or after major life events.

Example Table: Risk Scoring

**Tip:** Assigning risk scores helps you proactively plan for setbacks and allocate resources where they’re most needed, making your goals-based financial plan more resilient 

([**learn more about risk scoring**](https://legal.thomsonreuters.com/blog/risk-scores-overview/)).

Contact us for more information.

Phone: (480) 364-7401 | Email: hello@cognisgrp.com | Request Free Consultation