What is Your Why?
Setting your financial goals is not a simply a process of deciding how much money you need. Examples of common financial goals are:
- To save $5,000 over the next year
- To save $500,000 for retirement
- To have a passive income of $50,000 a year
Goals such as these are unlikely to be achieved. That’s because money has no intrinsic value; its value comes from what it is used for. Unless you are clear about what purpose money serves in your life, you will never be motivated to accumulate it. Finding your purpose is simply a matter of asking yourself ‘why’. For example, the reason why you have a goal of $50,000 passive income a year might be ‘to achieve financial independence’ . Now ask yourself why financial independence is important. The answer might be ‘to have financial security’. In turn, the reason why financial security is important may be ‘to provide for my family’. The trick is, to keep asking yourself ‘why’, until such time as your discover what is fundamentally important to you. Ultimately, you may uncover higher level objectives such as pride, satisfaction and personal fulfillment. These are the things that will motivate you to achieve your financial goals.
For most people, lasting satisfaction and fulfillment come not from possessions but from intangibles such as relationships with family and friends, good health, or broadening your life experience through education and travel. When you truly understand what motivates you and what you want to achieve in life, rewrite your financial goals to include how much money you need and why, for example, ‘to achieve financial security and independence through having a passive income of $50,000 a year’. Writing your goals in this way makes them much more meaningful and powerful and more likely to be achieved.
Turn Resolutions into Reality
A New Year, a new start and resolutions to get fit, lose weight and spend less. Every year it is the same story. The trouble is, most people fail to understand how to turn resolutions into reality, so nothing changes. There are some very simple ways of making sure you achieve your goals.
Avoid making high level, non-specific goals. If you want to save money, think about how much you want to save and by when. Being specific helps to focus your efforts and gives you something to measure yourself against. Think about the alternative options or strategies you have to achieve your aims. Are you going to save money by spending less or by increasing your income? Perhaps you have an idea for a business opportunity that could bring additional income.
Once you have your strategy, break it down into specific details. If you want to spend less, where exactly will you cut back? Analysing what your money is spent on now is a good place to start. Break down your long term goal into shorter term intermediate goals that are more easily achievable. For example, set goals for how much you can save in the next week, the next month, the next three months and so on. Put any other detailed actions into a time line so you can measure your progress. Once you have a plan, share it with your friends and family. They can help check on your progress and encourage you to stick to your plan.
Finally, the most important step is to take action within the next 24 hours. Think of something you can do, even if it is as simple as making a phonecall or checking your account balances online. This will be your first step towards turning your resolutions into reality.
Redesign Your Life
Have you ever wished you could do something completely different with your life? Many people live their lives in a linear fashion, with one step logically following another, only to realise that the place they have ended up in doesn’t give them happiness or fulfilment. In the extreme, what results is often termed a mid-life crisis that can involve sudden changes in relationships, careers, finances and lifestyles. If you are unhappy with the path that you are on, you have two choices: stay on it and remain unfulfilled, or transform your life by taking a different path.
There are many reasons why people choose to stay on an unfulfilling path. Of these, the two principal reasons are fear of change and a belief that money (or lack of money) is a constraint. To make a fundamental change in your life, there are three extremely important ingredients that you need:
- A clear and compelling vision of how you want your life to be and why
- A plan for the changes you need to make to let go of the things that are holding you back and propel yourself towards the life that you want.
- The courage and motivation to take the necessary action.
The greater your financial resources the easier it may be to change your life, but lack of money should not be a barrier.
Making a fundamental change to your life means taking risks and letting go of things that have previously given you comfort and security, such as your job, your house or other assets and even friendships. The transition can involve sacrifice and discomfort in the short term. It helps to imagine yourself living the life of your dreams because your imagination will produce the energy and creativity you need to bring it into reality.
