You are here: › The Way to Wealth

The Way to Wealth: Setting SMART Goals

“Wealth is the ability to fully experience life.”
- Thoreau




How do you get started building wealth? In the first part of this article we talked about creating a wealth building plan. You need to do that first so you can clearly see first where you are and then you can figure out where you want to go.

So now what do we do?

Now you start tracing the road that is going to get you on the way to wealth. You do this by taking three important steps:

  1. Setting SMART goals
  2. Breaking down those goals into actionable objectives
  3. Reviewing your goals periodically to measure your progress
Rinse and repeat…

Yeah, yeah, I have heard this goal stuff before…I set my goals, start working on them, but then life happens and there go my goals...

Exactly! That is why just setting goals does not work. You have to set goals the right way…

The Way to Wealth: Setting Smart Goals

You might have heard the acronym SMART for goal setting before, here's a quick review:

Specific - don’t just say “to lose weight” or “achieve financial independence”. You need to be very specific about what you want i.e. “lose 30 pounds” or “have a net worth of 1 million and have no debt”.

Measurable – you have to set a guideline by which you will know whether you have achieved your goal or not. Using the example above if you step on the scale and are 30 pounds lighter there is no doubt you achieved your goal.

Achievable – a good goal will stretch your limits but it also has to be something within your reach. Achieving a net worth of 1 million by next year if you are $30,000 in debt is not realistically achievable. Paying off half of that debt or more in one year is.

Realistic/Relevant – The “R” can stand for both. Realistic, because if you set a goal that is too much of a fantasy then you are setting yourself up for disappointment. But more important is Relevant. This means that you have to have a big “WHY”, a big burning desire inside of you to achieve that goal.

Time Bound - every goal must have a time component attached to it, a deadline basically for you to achieve your goal.

the way to wealth
However, I strongly believe that setting SMART goals is only half the work. The other half are the crucial goal setting strategies that I will explain below.

From the previous assessment make a list of your goals (in SMART format)- those things that you would need to achieve on the way to wealth creation.

It can be one goal, it can be five. I would suggest no more than five since more than that would be too many to keep track of given the following breakdown you will have to do.

You probably want to be looking at a time horizon of anywhere from one year to ten years out. This can really vary with your personal situation, desires and circumstances but to give you an idea of what we are talking about here are some examples:

  • To achieve financial independence by my 45th birthday by having accumulated a net worth of $2 million.
  • To have my home paid off by 2017.
  • To create a portfolio of real estate properties that produces $5,000 monthly income and is worth $1 million in equity by 2011.
  • Own a beach house in Myrtle Beach within 5 years
  • Create a business in (your specialty or desire) that will produce a $2,000 monthly income by September 2010
Your goals have to be important to you but they need to be specific and they need to inspire you on the way to wealth.

Important: think about how you will feel when you accomplish them and also think about how they make you feel now. Make sure these goals contribute positive feelings and make you feel good now and later.

Why do you need to do this?

Because when you align these goals with who you are and who you want to be this will motivate you to get out of bed every day to work on the life you want to create.

The Way to Wealth: Objectives

Goals provide a clear, specific description of what you want to achieve. Objectives are basically the steps you need to take to achieve those goals. You can look at them as mini-goals themselves whose accomplishment will get you closer to achieving your main goal.

What you want to do is take your goal and break it down into actionable steps for which you can see and understand the action you need to take to make it happen.

This exercise is invaluable because the reason the majority of people cannot see the way to wealth is because their goals are too big and involve too many steps, then they get easily overwhelmed and quit.

By breaking down your goals into smaller, more manageable pieces you can wrap your arms around, your odds of achieving your goal increase exponentially.

Using a piece of paper you will first write down your goals but then proceed to break down each goal into actionable objectives. Here is an example of how to do that:


Main Goal – Within five years assemble a Real Estate portfolio of single family residences with an equity position of $500,000, with positive cash flow.

One year objectives:
  • Spend the next 4 months acquiring the education I need to figure out how to buy my first property.
    • Check out real estate investing titles from library
    • Join my local real estate investing club
    • Spend first hour of every morning studying RE on books, CD’s, blogs, forums
    • From studying and networking determine the price range, area, down payment (if any) that I will need to acquire first property
    • Find a real estate agent that works with investors and can help me find the property
    • Acquire my first property within 9-12 months
Two to three year objectives: Acquire one property per year at least at a 30% discount from market value that cash flows a minimum of $200 per month.
Get the point?

If you just set a goal of acquiring real estate to have $500,000 in equity, your first thought would be “how the heck am I going to do that?” but when you break it down into smaller steps it becomes a lot more doable. But more importantly, you now have actions you can take every day to get you closer to achieving your goal.

Keep in mind that the way to wealth is a long path. Although long term planning is important you really cannot know where you are going to be in two years, much less five so planning on a much shorter time scale is more practical. It’s Ok to have 3, 5 and 10 year goals but you plan in detail for no more than 12-18 months down the road.

“But how will I know if I am on track to meet my long term wealth building goals?” That is where this last part comes into play...

The Way to Wealth: Reviewing Your Goals Periodically

Because your path on the way to wealth will be full of obstacles it is important that any planning that you do is dynamic planning - that it can move with you and you can shape it as you go along.

Don’t follow a plan into a brick wall. If you are sailing and the wind changes on you, you have to adjust the sails you just can’t tell the wind where to blow or just sit there and hope that the wind will change again in your favor.

You should do two types of goal reviews; a quarterly/annual review and a monthly/weekly goal tracking review. You can review your long term goals and plans on a quarterly basis to make sure you are on track, and then revise them every year.

Once a year you set annual goals that support your long term plans. You would write these down by setting goals in different categories that are important/relevant to you i.e. family, business, career, health, etc.

Then for each goal you would write down the major objectives you would need to complete that will lead to the achievement of your goal.

You should review your goals every week and then decide what are you going to do this week and even this day to get you closer to achieving your goals.

Another crucial goal setting strategy is to keep your goals in front of you as much as possible. Write them on a dry erase board on your wall at home or at the office, print them out and keep them in you planner or review them in your computer each morning.

Keeping your goals in front of you reminds you to start your day working on your goals first and plan your week around them instead of getting distracted by things that are important to others and not to you.

The Way to Wealth: Call To Action

Creating a plan for building personal wealth was very hard for me yet it has proven invaluable. I recommend you do the same.

Remember, successful people are those that are willing to do that which the unsuccessful are not...plan accordingly on the way to wealth .



Send Me the Wealth Insights Newsletter!


And I will send you a FREE Ebook and my investing spreadsheets

Your Best E-mail: spa First Name:


E-mail will not be shared with anyone.See our privacy policy.




Comments or Questions?

Do you have questions?
Would you like to share your comments?
Use the box below to share with me and others!

[ ? ]

Author Information (optional)

To receive credit as the author, enter your information below.

(first or full name)

(e.g., City, State, Country)

Submit Your Contribution

 submission guidelines.


(You can preview and edit on the next page)

What Other Visitors Have Said

Click below to see contributions from other visitors to this page...

Goal setting strategies 
LM, this is an awesome strategy to set goals. Thanks for going into the details. I agree with what you say about keeping them in front of you all the …

Click here to write your own.

Return from The Way to Wealth to Wealth Steps Home

Have Questions or Comments? - Have your say about what you just read, use the box below (you don't need a Facebook account).
wealth steps rss feed wealth steps facebook wealth steps twitter wealth steps google plus

Get on The Road to Wealth!


Subscribe and get access to my FREE ebook and tools for investing and managing your money.

Your Email:

Your Name:

Then

E-mail will not be shared with anyone. See our privacy policy.


wealth steps blogWealth Steps Blog Newest Content:

wealth insights newsletterNew Posts by Email


Lets Connect!





Best of Wealth Steps


Most Popular:
My Current Project: Flip That House
Importance of Financial Planning Signs That You Need Credit Counseling Debt Relief
The 6 Steps to Basic Financial Planning
My First Flip: Flip This House
Simple Net Worth Calculation
My Favorites:
Going From Debt to Wealth by Focusing on Wealth
Solutions To Credit Card Debt: The Debt Snowball Plan
Dealing With Problems When Flipping A House
Buying Foreclosures – Creating Wealth with Foreclosure Investing
Building Wealth Through Dynamic Planning