Statistically, only a very small percent of people successfully achieve goals they set! Only 20% of us set goals. Of these, 70% fail to achieve their set goals… Yet, goal setting and achievement could be the key to unlocking your financial freedom.
Successful investors are goal orientated and develop effective goals that provide an action plan and indicators for success. Billionaire Warren Buffet states “those that have enjoyed success know the importance of goal setting, commitment, dedication.”
Developing financial goals puts YOU in CONTROL of your LIFE…
Goal setting requires dedication to develop realistic, inspiring and achievable goals.
You may recall the children’s story “Alice in Wonderland”. Believe it or not, the Cheshire Cat demonstrates a very important lesson in goal setting….
Alice comes to a fork in her path and asks the Cat “which path should I take?” The Cat replies “that depends on where you want to go”. Alice doesn’t know where she wants to go (or what she wants to achieve), hence the Cat responds “then either path will do”. The lesson here is, without clearly defined goals and corresponding actions, how will you ever achieve where you want to be?
Don’t panic! An effective approach to developing goals is found in the SMART method. I like to add an “I” to the front of SMART, representing “Inspiring”. This assists in identifying a goal you are likely to work towards, generating emotion and focus.
Inspiring – what stirs emotion in you that you will be dedicated to achieving?
E.g. the goal may include time to enjoy your life doing what you want to.
Specific – Define what you want to achieve, by when and why:
E.g. Generate a passive Income of $100,000 from property investments in 10 years so I can retire and spend more time with my family.
Having a goal of “financial freedom” is not specific enough; how will you know when you have achieved this, what it looks like and how to achieve?
Measurable – Ensure you will know when you have succeeded in your goal?
E.g. passive income of $100,000 in 10 years can be measured in $ and years.
Achievable – Can you succeed in achieving your goals under your own influence?
E.g. relying on exceptionally low interest rates to achieve your goal is outside your control, potentially unachievable. A goal of achieving passive income of $100,000 in 12 months might be setting you up to fail – which we don’t want either!
Relevant – Does the goal align with what you want?
E.g. The above Specific goal does align with overall desire to retire financially free
Time Bound – When will you measure your success?
E.g. 10 years (and incrementally along the way).
Once you have developed your ‘goal’, you will need to develop an action plan on how to achieve this. This will likely contain several smaller goals / actions required to achieve overall goal. These could include:
• Consult mortgage broker in the next 3 Months
• Develop budget in the next month and review each 6 Months
• Research property market to identify best properties for my goals every month
• Save $200 per week for deposit
• Purchase 1 property each year