Tuesday, January 22

How to Set Personal & Financial Goals You’ll Actually Accomplish

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Everyone sets goals or New Year’s resolutions, but few actually achieve them. Old habits die hard, and it isn’t easy to change your ways. However, there is a method to set personal and financial goals you’ll actually accomplish.

When I was in my 20’s, I had a bunch of goals I wanted to accomplish by age 30. Some were financial, others were career-focused, and some were personal. I wrote them down, and even though I did not review them often or pursue them with a real calculated strategy, I still managed to achieve all the major items on my list.

However, a terrible thing happened after: I floundered.

Having hit all my personal milestones by age 30 but not planning for anything to come next, I spent the next 2 years wandering aimlessly without a clear direction. This is why we as a culture all have to stop obsessing over age 30 — life exists beyond it! Unsurprisingly, I didn’t accomplish very much at 31, or even 32. Granted, I had a baby during that time, so surviving was a tremendous accomplishment, but I digress.

About halfway through 2018 I finally acknowledged that I wasn’t feeling great about a lack of personal progress in my own life, and decided to change it. It did it the same way it had worked for me before, and surprise! My method immediately started working again.

Imagining your end before you start

The first thing I do is imagine my ideal life at a certain age. Since I’m now in my 30’s, this is age 40 but if you’re younger or older you can adjust accordingly. I describe myself and my life at age 40 in detail, answering questions like:

  • What kind of home do you live in? Do you own or rent?
  • How is your home decorated? How does your space feel?
  • What kind of car do you drive?
  • What kind of clothes do you wear? What is your personal style?
  • How much money do you have saved for retirement? For emergencies?
  • What are you doing for work? How many hours per week do you work? What is your office environment like?
  • What educational or career milestones have you achieved?
  • What are your hobbies? How much time do you spend on them?
  • What is your day to day life like?
  • What is your health & fitness routine?
  • How often do you travel? Where to and with whom?
  • What is your relationship with your children like? What do you focus on providing for them? What are you teaching them?
  • What is your relationship with your family like? What traditions do you maintain?
  • Who are your closest friends? How often do you see them?
  • How do you give back to your community? Do you give to charity? Do you volunteer?
  • What are your main priorities? How do you make time for them?

Once the above is answered and described in detail, you can then figure out the steps to get there. For example, if in 7 years you see yourself living in a 3 bedroom house that you own, then you need to buy a house. In order to buy this house, you need to save a down payment, have good credit, and qualify for the mortgage. Likewise, if your goal is a management position for a company you don’t yet work for, then you need to figure out how to qualify for that job and get hired by that company. This may include going back to school for certain credentials, or changing jobs within the next 12 to 18 months to get the experience you need.

Working backward from your BIG goals to create 2- to 5-year plans

Essentially what you want to get from your “ideal life” exercise are the things you need to focus on in the next 2 to 5 years. Your magical future will not put itself together on its own, but it also is far enough away you can’t make it happen immediately. What you need to do is find out what you can do RIGHT NOW, this month, this quarter, this year to bring you one step closer to where you want to be in a decade.

Once I knew where I was going, I figured out where I needed to be at age 35. This gave me a list of tangible things to complete over the next 24 months, which will set me up on track at age 35 to be where I want to be at age 40.

This work might seem laborious and tedious, but you absolutely must do it. Your ideal life is not going to simply happen to you. You’re not going to fall into the right job or the right home by circumstance or fate. You have to be proactive in the pursuit of the life you want. This doesn’t mean you won’t change your mind about what you want as time passes. It simply means you’re more likely to get what you want and feel like you’re living the life of your dreams if you know what you’re working for and why.

Reflecting and planning for the New Year with The Year Compass

Two years ago, I asked you what your favorite tools for setting New Year’s resolutions were, and a few answered The Year Compass. It’s incredible!

The Year Compass is a free (your favorite price!) booklet that walks you through reflecting on the past year and planning for the next one. It takes a significant time investment to complete, but the results are transformative. It’s best done over 3-4 hours, ideally in one sitting if you can spare the time. You can choose a digital fillable copy, or there are print options if you’d rather go the old-fashioned pen and paper route.

The bulk of The Year Compass is spent reflecting on the past year, both the good and the bad. I’m always surprised when I complete the page of important events and projects. Even when I feel like I had the most boring year, writing everything down shows me a TON OF THINGS were always happening.

Executing on your financial goals

I encourage you to do The Year Compass and take a holistic approach to your entire life and well-being, but since this is a financial website we’ll focus on the finances here!

Whether your goal is debt repayment, savings, or both, you need to paint a clear picture of where exactly you want to be so you can draw a map to guide yourself there. For your financial goals, imagine yourself as I suggested above at your next significant birthday: age 30 or 40 or 50. How much savings do you have? Is your debt paid off? How much money are you earning? How do you spend it?

Now, once you know what you want your life to look like 8 to 10 years from now, ask yourself what you can do in the next 2 to 5 years to make that happen.

Once you know where you need to be at year 2 or 5, you can probably deduce what you need to do in the next 12 months to get you on the right track.

The one thing you SHOULDN’T do when setting financial goals…

When you’re laying out your long-term financial plans, you might be tempted to take a financial goal for 5+ years from now and calculate how much you need to save on a monthly or weekly basis in order to get there. DON’T DO THIS!

Yes, you read that right. I’m telling you NOT to break down a major goal into a teeny monthly (or less!) step. While breaking down a lofty money goal into a minuscule step might initially make it seem more achievable, it’s actually very likely to set you up for failure. Why? Because not everything is going to go according to plan.

There are challenges ahead that you can’t see, but will dramatically affect your finances. You could be laid off or become disabled or get divorced. You might be the victim of fraud or theft. There’s no way to say for sure what financial challenges lie ahead for you, we can only know for sure that there will be some. To cope, you will need your financial goal plan to be flexible and defensive. Give yourself a buffer, push yourself to achieve things ahead of schedule, and don’t beat yourself up when things go wildly off track.

Final thoughts

Money is an important aspect of your life that can drastically affect many other areas. However, it’s not the only thing. While you may be tempted to focus singlehandedly on financial goals in the New Year, don’t forget all the things you can achieve that aren’t tied the number in your bank account.

Comment below with what you’re hoping to achieve in 2019!

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About Author

Student debt killer, super saver, and stock market addict. BSc. in Chemistry from the University of Alberta, MBA in Finance from the University of Calgary, and PhD from the school of life in being a badass. Currently residing in Calgary, Alberta, Canada, but hooked on travelling.

1 Comment

  1. My big financial goal is to start investing regularly. So far we’ve been investing windfalls and income tax returns, but not a regular sum of money a month.