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Introducing Purpose-Driven Investing

Introducing Purpose-Driven Investing

How We Achieved Our Goals as Kids

We can learn a lot from our youth. Do you remember what it was like to save for a goal when you were younger? I didn’t get an allowance, so I earned all my money. The process was the same every time. I would get an idea for something I wanted, and then I’d figure out how I was going to make the money to pay for it. If it was a big purchase, it might take weeks or months to earn enough money to buy it. I’d write the goal in big red letters on an envelope and occasionally put money in it. Once I had earned enough money, I would take my savings from the envelope in my nightstand and head to the store.

Rarely did I have more than one goal at a time, but if I did I would have a clearly marked envelope for each goal. If I was saving for a large purchase, I would often change my mind and focus on saving for something else. Even though I changed my mind a lot, I always had a reason or a purpose for earning and saving money.

When we’re young, we have a single focus and very few other expenses competing for our money. All of our earnings can be directed to our single goal.  It was really pretty simple. We worked, earned money, and then put the money in a safe place until we had enough to achieve our goal. This was an effective way to save when we were young, but then we get older and our lives get more complex. Can we develop an equally effective and simplistic solution to invest and reach our financial goals now? Yes!

Purpose-Driven Investing 

Purpose-Driven Investing takes what worked as kids and updates it to work in a more complicated world. You’ll be able to invest for your goals with laser-like focus. You will always know how close you are to reaching not just one or two or your goals, but all of them. The process will be very similar, but instead of using envelopes and nightstands, we will use a program that’s more secure, effortless, and easier to invest for multiple goals.

We are outcome-focused, and we want to see immediate results. We need a purpose. There’s nothing worse than action without a purpose. Traditionally, most people invest for various vague goals and lumped all of their savings together in a single investment account. That’s pretty boring. It’s also not very inspiring or effective.

Purpose-Driven Investing satisfies our need for a purpose AND our need for instant gratification by thinking of each of our goals as a separate “basket.”

Each of our baskets represents a single goal with a clear purpose and that we can see grow.

What does this mean in the real world? 

It means that we have a single investment account for every goal. For example, if one of your goals is to take the family on a European vacation, create a separate savings account called, “Family European Vacation Fund.” This account or basket contains all of your savings toward that one goal. Every penny in the account is for the European vacationnot for retirement, a new car, your emergency fund, your kids’ college tuitions, or any other goal. What was once just a plain investment account is now a dream — a real goal you are committed to achieving. Account statements have been transformed from boring pieces of paper into exciting treasure maps!  

Purpose-Driven Investing simplifies investing so you don’t feel confused or overwhelmed. 

It will help you develop an investment plan, help you stick to it, and help you achieve your goals—in order of importance—based on your level of sophistication and desire for involvement. Purpose-Driven Investing is just a mature and more effortless version of the envelope system I used as a kid.

Even though you’ve never invested with a purpose, and that this method is completely new to you, it will immediately feel a lot more natural than what you’ve been doing because it recognizes that we may have dozens of goals at any one time, and that each of those goals has their own time frame and priority. The purpose is to help you reach your goals by becoming a better investor and taking fewer risks. You will make smarter investment decisions and you will feel less financial anxiety. 

The proceeding blog post is an excerpt from The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week!, available now on Amazon.


About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

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