Happy new year! I hope that the new year brings a fresh start to you.
I haven’t really set any resolutions this year (well, I did say last year that New Years Resolutions Suck).
Instead I have thought a bit about my goals for the year.
What do you do when you want something (a new laptop or ipod perhaps)? I bet you think about it a bit. If it is something you want to buy you may save up and get it.
Say you want a new TV. You splash out on your credit card and then probably repay it the next month (or maybe you add it to the debt that is already there).
That works for what you want in the short term (3 months).
But what about the long term? Where do you want to be in 3 years? 5 years? 10 years?
Where do you want to be financially? What do you want to have achieved out of life?
Have you really thought about those and what you want to get out of life?
Sometimes by looking at your financial goals and working backwards – you may realize you are not going to make it.
My Goal - Millionaire by 30
My goal when I was 17 was to be a millionaire by the time I was 30. If I had really focused on that goal – then I would have realized that to be a millionaire you must do something like:
- Start a business
- Invest in property (a few properties).
I even tried to work backwards if I doubled the money I had every year then could I get there. E.g. I had $3,000 when I was 17 – if I doubled that each year I would be a millionaire in 9 years. (note if you start with $125 and doubled your money each year you will have over $1 million in 13 years).
But if I had done step 1. – I would have realised that I don’t want to be a millionaire, I want the lifestyle of a millionaire. Because having $1,000,000 in the bank doesn’t mean much if you can’t enjoy it!
1. What do you want exactly?
Think about and write down exactly what you want. Instead of saying I want a nice house.
I want a 4 bedroom house 5 minutes from the beach within 12kms of Sydney (I haven’t actually specified a suburb because you might change your mind)
2. How would you manage to get it?
You might realize that at your current job –you might never be able to save enough for a deposit for the dream house you want.
In this case you can do one of two things:
1. Think about how else you would be able to achieve your goal (e.g. afford the house).
This is very powerful. If you go to bed thinking about this house every night- you might come up with a way to get it. Maybe you would need to start your own business (rather than working for someone else) to be able to afford the house.
In Rich Dad, Poor Dad – Robert Kiyosaki said there were many differences between his Rich Dad (his friends dad) and his Poor Dad (his actual dad). In my mind an important one was while Poor Dad said “I can’t afford this”, Rich Dad said “How can I afford this?”.
One makes your mind give up and one sets it to work thinking.
2. Realise that it might be too hard and re-set your goals
You may realise that to save for the house you would have to give up too much effort and time that you are not prepared to do. You might be decide to adjust your house goal to what you could afford from your current job.
Instead of a house near the beach you may decide a 3 bedroom house 5 minutes drive from a train station less than an hour from work is OK.
You may still need to set ambitious goals (saving 20% of what you make for example). But at least you will have worked out what you can afford and not be disappointed when the time comes.
3. Getting started – Set a plan to achieve your goals and DO IT
This is the most important step. You might work out that you could save a deposit for the dream house – but if you don’t start saving you won’t get there.
So all the best, for working out what you want, setting goals and don’t forget the most important step-