I am not very fond of goals in my work life. I set goals because it’s required as per our performance review process. In my financial life, I do not have any such requirement, here it is my territory where I have all the control. Naturally, I don’t set goals in my personal financial life. But, that’s the way I am. Most of the people I know have financial goals in life.
Which is unlikely given that most of the Americans do not have any goals in financial life. More than 80% of Americans do not follow a strict budget either.
It works for me to have enough savings without a goal or a budget because I save 50% of our monthly income, as soon as they arrive in checking account. We live with rest of 50% of it. It is not easy for everyone to follow. In that case it is very essential that you have a financial goal for which you would strive. Let me ask.
Do you currently have a financial goal?
Do you have a finite number in mind and a defined date in which you plan to hit it? If not, then I’m sorry, but you don’t have a goal. You have a wish, or maybe it’s just a dream, but you don’t have a goal unless you have both a date and a dollar amount.
I once had a mentor that said, “Those that go through life with an unknown goal hit with amazing accuracy 100% of the time.” It took me a while to catch onto exactly what he was talking about, but here’s what he meant by his statement.
Those that have absolutely no goals in life obviously don’t have a road-map for their future. They know that they could really end up just about anywhere. So, when they analyze where they are ten years later, they are indeed on that scale of “anywhere”, which is exactly what their “goal” was, right?
Since they had no goals, there was no way for them to fail, but there was also no chance for real success either.
My friend is currently 27 years old and has a goal to retire in 7 years. At that point, he plans to be completely debt free and have an income of $2,000 a month (after tax) and have $1.2 million in the bank, not to mention a retirement fund of over $150k (which will grow to over a million by the time he’s 65 years old).
This is quite an outlandish goal compared to most, but he has his road-map planned down to the month (and in some cases, each week) and it actually seems quite doable with his many side businesses and projects. If just one of them proves to be successful, he’ll no doubt reach his goal.
So where do you stand on the spectrum?
What is your financial goal?
Perhaps you want to rid yourself of all your debts! That’s a great financial goal! Or, maybe you’d like to earn enough money passively each month so that you can do whatever you want during the day. Or, perhaps it’s much simpler than those.
Maybe you’d just like to make an extra couple hundred bucks a month so you didn’t feel so strapped for cash all the time.
All of these goals are great, but the real question is, when are you going to achieve it and how are you going to get there? Once you set a date on your goal, then you can start working your way backward to see what you need to do each month in order to get there.
For example, let’s say you want to retire with $1 million in 40 years. Instead of just blindly throwing money into the market and hoping that you’ll get there, it would be wise for you to find out what average return you can expect, and with that average return, how much do you need to invest each month in order to get to your financial goal of a million bucks?
Start with the goal, then set the date, and then make it manageable with incremental goals along the way. And don’t forget to celebrate those little goals when you hit them too! Good luck!
Readers, are you inspired to set up your own financial Goals yet? If you have one already do share us so that other readers can learn from it.