How to become rich through financial goal setting
How to make financial goals work for you
It’s the beginning of the year.
You’re ready, you’re focused, you’re motivated.
This is the year you take control of your financial freedom.
If the above is not how you are thinking, then you have a problem.
You need to set yourself up for 2022 to be your biggest year yet when it comes to money and financial security.
No more credit card debt, no more keeping up with the joneses, no more grinding away in a job feeling trapped because of the endless list of financial commitments that come calling every month.
The best way to do that – from someone who has religiously done it every year for the past 5 years and has grown my net worth now to over 350k by the age of 30 to prove it, is to set goals and manifest your way to a higher net worth. This is key to the FIRE movement (Financial Independence Retire Early).
Look, I know it sounds a bit pie in the sky, but this has worked for me.
I’ve read of countless others too, from billionaires to real estate tycoons who have all done the same. Practice what they preach. What have you got to lose?
So what are financial goals?
Financial goals are a specific money milestone that you want to achieve over a specific timeframe. Emphasis on the specific part.
What time frame?
Well I like to include both near term (next 30 to 90 days) goals as well as long term goals i.e. 6 months to 18 months plus.
- Near term goals could include going after your credit card debt or contributing 2,000 dollars to your savings account over the next 30 days.
- Long term goals could be focused on saving for a home or growing your pension contributions, or my long term goal which is focused on achieving financial freedom.
But you can define your own timeframe.
These are your goals.
5 Steps to Setting Financial Goals
1. Physically write your goal down.
I can’t emphasize this enough.
This is where the magic happens, grab a pen and paper and write your goal down. I know many millennials and even more so the Gen Z’ers out there will be like…‘a pen? What on earth is a pen?’
Ask your parents or grandparents to borrow one, it’s what they used back in the day to write a letter or fill out a tax form. Before the world of Tiktok and Instagram came to be.
Something magical happens from actually putting pen to paper and bringing your idea into the physical world. Whether it be the power of manifestation or some other black magic working in the ether.
Take the old school approach and write them down.
Not on your computer, not on your phone, but physically on paper.
Trust me, you’re more likely to actually achieve them by doing this.
To help you get there I have included a free downloadable printable pdf below, just enter your email and it will be sent to your inbox.
Print it off! and follow the SMART instructions to craft your financial goals now.
This little bit of effort will pay dividends in the long run.
This is how I actually write my own goals every year and has been one of the key reasons I am on track to achieve financial freedom by the age of 35.
Download FREE printable SMART financial goals template now
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2. You should see these goals more than you see your loved ones, make your goals visible
Once you have written down your goals, make them visible. I like to hang mine up either on the fridge or my washroom mirror.
I want to be reminded everyday what my goal is, even if I don’t notice it…subconsciously your eyes and brain will be taking in this information and reiterating your goal over and over.
These goals should haunt you…well maybe that’s a step too far but you get where I am coming from.
Put them in a place you will see everyday.
The more visible the more likely you are to stay on track and achieve them
3. Make your financial goals SMART
What do I mean by SMART? Well I mean make them:
– Specific: The more specific the better. For example the worst thing you can say is, ‘I want to be rich’. That’s way too vague. Narrow it down! Instead say ‘I want to reach $100k in my investment account by December 2022, through regular monthly contributions of $5k per month’. Much better!
– Measurable: Okay, so say you’re credit card debt is a major issue for you…don’t worry I know how enticing takeaways over the holidays are. But now is the time to select a specific amount, something you can measure to know if you hit the goal or not. You look at your credit card balance, and you see $8k of debt. This is a measurable amount you can now work towards paying off as part of your budget. It’s now a measurable financial goal!
– Achievable: Make your financial goals achievable. Look at your income level and current lifestyle and commitments to determine what is achievable for your personal circumstances while setting your goal. I’m not saying to limit yourself, but set the parameters of what is achievable. Your goal should make you feel challenged but not stressed out that you will never achieve it. Make sure it is within your means to accomplish.
– Relevant: Remind yourself why this goal is relevant to your current circumstances. Ask yourself the questions; Why am I setting this goal now? Is it aligned with my life objectives? What will happen if you don’t achieve this goal? Asking these questions will make sure it’s relevant to you and nobody else while also highlighting consequences of not achieving it. Adding further motivation to smash your goals in 2022!
– Time Bound: Many financial gurus out there have highlighted the importance of ensuring your goals relate to a specific time period. Will you ever really reach your goals if there isn’t a deadline? One of my favorite quotes from guru Benny Lewis: ‘There are seven days in a week, and ‘someday’ is not one of them.‘ This is so true, I often hear my friends say ‘ah someday I will achieve that’. F*** that, you need to delete the word someday from your vocabulary. Define your deadline and stick to it. Make your deadline achievable but also not too easy, you should be challenged.
4. Don’t compare your goals to others
Everyone is on their own journey at their own pace, with different income levels and different obligations and family circumstances.
It can be disheartening to look around Reddit forums and FIRE blogs, even like mine, and compare yourself to others at a similar age. Why am I not at the same level? I am guilty of this too, but this is a one way stop to failing.
You need to get started, set your goals and stick to them.
They are yours, no one else’s – so don’t compare yourself to others.
Block out the crowd, stay focused on your goal and you will achieve it
5. It’s okay to fail – don’t stop!
Set your goals, and work towards them as best you can. Stick to and measure your progress along the way.
But don’t stress yourself out, it’s okay if you don’t 100% achieve all of your goals this year. Or you suddenly get a set back in this journey we call life.
If you achieve them next year that’s okay too. The important point is getting started on the road and planning, progressing, growing, building every day/month and year.
If you never start, you definitely will fail. But if you start there is always the chance of success no matter how small or big the goal!
My own financial goal example
Now that you know the process of writing a goal.
I can start, and show you an example of a completed goal I had in 2020 that ticks the above boxes.
Example: ‘Grow my dividend income from my brokerage account to over $5,000 per year by December 31st 2020, and reinvest all of it to work towards my financial freedom goal of $1.5M by 35’
This goal ticks all the boxes, it’s specific, measurable, achievable, relevant to my journey and time-bound.
And guess what? I smashed that goal and achieved over $8,000 of dividend income in 2020.
This is definitely not to gloat, but to highlight by writing this goal in January 2020 and putting it on my fridge so I saw it every day. My investment strategy was then always aligned with this goal.
I pursued higher yielding stocks and Real Estate Investment Trusts (REIT’s) that paid me more money each month.
I stayed consistent and invested every month to ensure I kept growing my principal.
If this goal wasn’t there every morning I went to grab almond milk for my oats every morning, I’m not sure I would have discovered or focused on how much income my assets were paying me.
If you need some further help crafting here are some common areas to focus on for financial goals. I know it’s hard to even know where to start, but there is no wrong answer here.
Common Financial Goal Areas
- Pay off your credit card debt
- Pay off your credit card bill every month
- Clear off your car payment debt
- Save more than 50% of your after tax take home pay
- Invest all your disposable into the stock market cash every month
- Create, plan and stick to a budget
- Build up your emergency fund
- Max out your retirement accounts (RRSP, TFSA, 401K, ROTH IRA etc.)
- Achieve financial freedom
Why is goal setting so important for realising financial freedom?
Having a focused well written goal will change your mindset and ultimately how you look at the money in your pocket.
You will begin to relate how every decision you make matters to your pursuit of financial independence.
Before setting financial goals I would spend money on a whim buying coffees and lunches out every day with no regard. Don’t get me wrong, I enjoyed every sip and bite.
But now with a goal to work towards, every time this decision of a coffee out presents itself I look at just how much these little cups of joy are costing me.
I was spending $30 dollars a week minimum on coffees out. Americano’s, Latte’s, Cappuccinos…. you name it, I drank them.
That’s over $120 dollars in one month, sometime more when I was feeling healthy and wanted oat milk instead of regular dairy milk. Why do they charge extra for this??? Starbucks get yourselves together!
Instead of spending this money on coffees, what if I invested it every month into the stock market?
Well using compound growth that $120 dollars per month could turn into nearly $10,000 after 5 years. That’s a pretty nice used car I was drinking!
Stretch out the time horizon to 15 years and you’re looking at a brand new Ford F-150! Overy 30 years, you could be looking at over $300k or a new house!
You get the picture.
How you set money goals today will define how rich or poor you become in the future, so what are you waiting for?
Let me know what your financial goals are for this year, I would love to hear some. They always motivate me too to see other on this journey.
I would love to hear from you guys+gals!
I hope you find some of these areas helpful in your own journey to whatever your goal is. Follow along on my journey and subscribe to my newsletter and never miss a post, I keep my net worth updated here.