Imagine watching a game of footy. You’ve taken your seat, watched the players run through their warm-ups and take their positions on the field. The siren sounds for the first ball-up and you suddenly realise there are no goals at either end of the ground.
At the end of the game how would you know who won? How would you know who played a good game? What would the coach tell you to do if the team at each break? “Run… somewhere. Kick at… something. Stop the other team from doing… stuff.”
It’s ridiculous to even imagine such a scenario, yet many of us live life this way. We run around on the field of life with no goals to aim at and therefore no idea if we’re playing well, winning, losing or something in between.
Now that you’re thinking about it, you might realise we all have some kind of goal, but they’re often vague and uninspiring – “Yeh, I guess I want to own a house one day, and probably get married and maybe give back to society in some way.” The reason we have such vague goals is simply the fear of failing. Once there’s a real goal to aim at, we can miss, and no one likes missing the goal they’ve set. So Rule #1 – No fear
Yeh, you might miss the goal (or you might set a ridiculous goal) but at least you’re having a go, at least you showed up to the game. Go easy on yourself and let your goals be flexible if they need to be. You’ll get better at it the more you do it just don’t give up.
Rule #2 – Get SMART
SMART goals are Specific, Measurable, Achievable, Realistic and they come with a Timeframe. You’re far more likely to achieve your goal if it’s SMART. An example of a general goal might be, “I want more money.” A SMART goal would be, “I want to clear my $1,000 credit card debt and save $2,500 by January 1, 2016.” This goal is specific, it can be easily measured, it’s achievable, realistic and the timeframe to complete it is clear.
Rule #3 – Be emotional
The next step is to ask yourself why you want that goal and then get emotional about it – how will you feel when you complete it? Taking the above goal as an example, the ‘why’ might be to get out of debt and take control of my financial situation. The feeling I’ll have when I complete that goal? Happiness, relief, a sense of accomplishment and pride.
Having goals is the key to a good financial plan, but knowing how to set them is just as important.