5 Goal Setting Guidelines

The victory of success is half won when one gains the habit of setting goals and achieving them.  Even the most tedious chore will become endurable as you parade through each day convinced that every task, no matter how menial or boring, brings you closer to fulfilling your dreams.

– Og Mandino

So far in our Balance Basics series, we have covered 2 of the 3 shampoo cycle questions. Today, we ask the third: Where do you want to be? Yesterday, we looked at our balance sheet and decided where the positives and negatives were. Now we need to decide what changes are needed. Using your balance sheet evaluation, set some goals for yourself. Obviously, finding ways to reduce debt and spending, or increase income  and savings would be common goals for just about everyone. Your goals, however, should relate to the specifics of your unique situation. Here are some general guidelines for setting goals:

  1. Put Them in Writing: Writing down your goals makes them more salient to you. You can easily revisit or revise them whenever you feel like you’ve lost your way. Putting your written goals in a special file on your computer or in a notebook where you can always find them is important. I have a bad habit of writing down ideas and goals on little sheets of paper that are inevitably lost or thrown out. Keep your goals organized.
  2. Be Specific: Having goals like “save more money” or “spend less” or “learn more about personal finance” will be much less effective than goals like “save $100 more per month by eliminating one night of take-out food per week”, or “read at least 5 good personal finance books this year”. Take it a step further and list a few of the books you have in mind.
  3. Have a Time Frame: You can make up a few different goal lists for different time frames. You can establish short, medium and long-term goals. Define what each of these time frames mean to you. That will depend on your age. Long-term for a 60 year old will be different than it is for a 20 year old. Short term goals could involve cutting spending in certain categories, or learning about a specific concept by a certain date. Medium term goals might include eliminating a certain percentage of your debt by a certain date. Long term goals would probably centre around retirement savings and wealth creation.
  4. Be Flexible: Having written goals doesn’t mean they’re written in stone. They can be revisited, modified, or tweaked at any time. I’m not saying you should flip-flop all the time, but your priorities can and will change as you learn more.
  5. Be Realistic: Set goals that are challenging but achievable. If you set a long term goal of growing your net worth to $1 million, but you have no way of realistically achieving that, you need to lower the bar a bit. Similarly, if you set a medium term goal of reducing your debt by 10%, but a little more effort could reduce it by 15%, go for the more aggressive target.

‘Tis the season for New Year’s resolutions, new beginnings, and turning over new leaves. I hope this helps get you started ahead of time. Even more, I hope that future articles will help you stay in tune with your goals throughout the year.

Have you started setting goals for 2010 yet?

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