My Blog, Your Money

Before I delve into meatier subjects, I want to go over goals, and more specifically financial goals. I think that on the journey to wealth, having goals will give you direction and allow you to focus your efforts efficiently. Once the objective is set, you will have a clear target that will always be sitting there in the back of your mind. As you go about your daily life, it will become a factor in many of the decisions you make everyday. Simple decisions such as which restaurant to eat at to big life decisions such as buying a car or home will all have to take your goal into consideration.

If you don’t have any goals yet, I suggest putting some thought into it and then drawing one or more up. The author of MyMoneyBlog had a mid-term goal of a $100,000 net worth and is now on his way to achieving a long-term goal of $1 million. Here is the post where he describes his goals and his reasoning behind them. These are just examples of some financial goals and, of course, yours do not necessarily have to be the same.

When setting goals, I suggest following some general guidelines to maximize your chances of success. One common method is the S.M.A.R.T. mnemonic:

• Specific – Be specific about what you’re out to achieve. Maybe you want to be rich. If you do, what does being rich mean to you? Is it an absolute amount of money such as $1 million, $100 million, or $1 billion? Or is it a relative figure based on certain criteria such as being in the top 10% of national households? Whatever your goal is, the point is to make it well-defined.
• Measurable – You must be able to measure your goal in order to track your progress and determine if and when it’s been achieved. Since the language of finance is ruled by numbers, this should not be hard to satisfy.
• Attainable/Achievable – Set a goal that you are capable of, but not so lofty that the odds of your achieving it are slim to none. It should be attainable, yet challenging enough that you are required to reach and make a genuine commitment.
• Relevant – Make sure that the goal is relevant to you. If your goal does not appeal to your needs and desires, then you will not be motivated to achieve it. For example, if your goal is to earn $1 million a year, but you have no use for all that money, then you will not be that serious about achieving it.
• Time-bound – Setting a deadline for your goal sets a time limit for your achievement and allows you see if you’re on track. If your goal is to be a millionaire, but you don’t specify by when, it could be 10 years or 50 years. There is no sense of urgency and you will not feel the need to make adjustments to your current behavior. Here’s an example of a goal that is time-bound: Save $10,000 by Dec 31, 2008.

I am not usually a proponent of mnemonics and other things-you-should-do lists because I find them all rather gimmicky, but I still read them to see if there’s anything I can take away that might serve my purposes. So you don’t need to follow everything that S.M.A.R.T. outlines, but hopefully some of its points will help in setting new goals or evaluating existing ones.

Whatever your goals may be, coming up with them is just the beginning. Taking action and making progress towards accomplishing those goals is another story entirely.

On a side note, one of my goals was to start up this blog by January 1. Mission accomplished there. Now I have an ongoing goal of posting at least a week. Stayed tuned to see how it goes.