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The Way to Wealth: Setting Goals“Wealth is the ability to fully experience life.” - Thoreau
What you want is, based on what you determined where you are at and where you want to go, start tracing the road that is going to get you on the way to wealth.
You do this by; first, setting goals, second, planning what you need to do to achieve your goals and then reviewing your plans periodically. The Way to Wealth: Goals From the previous assesment make a list of your goals, those things that you would need to achieve on the way to wealth creation. Write them in a clear and to the point way. Don’t just write “Be happy” (how do you measure that?) think about what would make you happy and set that as a goal i.e. travel across Europe in the summer of 2011. It can be one goal, it can be five, I would suggest probably 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. I personally have two, and they are complimentary to each other. Remember these goals are going to be the focus of your following actions. Since you are going to be planning for and devoting a whole lot of work to them make them count. They should be challenging and probably scary but they should also be realistic and you should associate a time component with them so it will help you plan. Set a time component to them. You probably want to be looking at a time horizon of anywhere from next 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:
And so it goes. These have to be important to you but they need to be specific and they need to inspire you on the way to wealth. Not only think about how you will feel when you accomplish them but think about how they make you feel now. Make sure these goals contribute positive feelings and make you feel good now and later. It is these desires and aligning them with who you are and who you want to be that will help you want 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 don’t achieve their goals is because they are too big and involve too many steps so they cannot see how they can make them happen. By breaking down your goals into smaller, more manageable pieces you can wrap your arms around, your odds of achieving your goal increase exponentially.Your objectives will also be time bound in relevance to your main goal. The most important part is that they are actionable steps. For example:
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:
Two to three year objectives: Acquire one to two properties per year at least at a 30% discount from market value. Hopefully you get the point. If you just think of acquiring real estate to have $150,000 in equity your first thought is “how the heck am I going to do that” but when you break it down into smaller steps it becomes a lot more doable. Another consideration is the time period on the way to wealth. 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. I would recommend that while maintaining a long term view, 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?” You ask. That is where this last part comes into play. Reviewing Periodically Because your path on the way to wealth will be littered with 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 so it can get you where you want to go or just hope that the wind will change again in your favor. I have found it very useful to do two types of review; a quarterly/annual review and a monthly/weekly goal tracking review. I have my big master plan for my life (more than just financial planning) that I review on a quarterly basis to make sure I am on track, and revise annually. From my annual revision I set annual goals that support my long term planning. I then do a quarterly review to make sure I keep my focus on what is important to me and I then set quarterly objectives which are steps I need to take to accomplish my annual goals. In my monthly and weekly review, I briefly review my annual plan and goals and then set goals for the month and the week I am in. As you can guess the monthly goals support the quarterly objectives which in turn support my annual goals. It is important that at this most basic level - the weekly and monthly objectives/goals - you keep them in front of you as much as possible. I write them on a dry erase board near my desk at home, at the office and I keep a printed copy of them on my paper planner. You might think this is overkill but for somebody with self-diagnosed ADD, it is imperative. Keeping them in front of me reminds me every day to start my day working on my goals first and plan my week around them instead of getting distracted by things that are important to others and not to me. Conclusion Creating a plan for building personal wealth was very hard for me yet the product of it has proven invaluable. I thought about going to a “professional” for help but I had a hard time finding someone that could do this so comprehensively. Most financial advisors are trained to adhere to the savings, investment, insurance parts of a wealth building plan. If you really want something tailored to you, guess who is going to have to do it? Seek help by any means if you are stuck on something or just plain don’t know how to do it. But you will still have to put in the time and effort, after all it’s your life we are talking about. Remember, successful people are those that are willing to do that which the unsuccessful are not…plan accordingly on the way to wealth. :-) Questions or feedback on The Way to Wealth?: Contact Me directly.
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