Week 10: April 10, 2008

Topic this Week:
Goal Setting for Financial Success

Read the following and then complete the Week 10 Assignment
Download Assignment Here

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The Wisdom of Goal Setting

An Indian guide who displayed uncanny skills in navigating the rugged regions of the Southwest was asked how he did it. "What is your secret of being an expert tracker and trail-blazer?" a visitor asked him.

The guide answered: "There is no secret. One must only possess the far vision and the near look. The first step is to determine where you want to go. Then you must be sure that each step you take is a step in that direction."

A dream is what you would like for life to be. A Goal is what you intend to make happen. A goal is the near look; what, specifically, you intend to do on a daily basis to get there.

Goals are the target of success! Who you see is who you'll be. What you set is what you get. Help your kids get the far vision, the dream. Help them get the near look, the steps and action plans that pave the road to their dreams.

Financial Goal Setting: Four Steps To Success

The first step in personal financial goal setting is learning to control your day-to-day financial affairs to enable you to do the things that bring you satisfaction and enjoyment. This is achieved by financial planning and following a budget.
The second step in financial planning and goal setting is choosing and following a course which will lead you towards the achievement of your financial goals.
Without financial goals and specific plans for meeting them, you will just be drifting along and leaving your future to chance. You've probably heard the quote: "Most people don't plan to fail; they just fail to plan."
The end result is the same and it is a failure to reach financial independence.
The third step in personal financial planning is learning how to build a financial safety net, which can be likened to having a retirement fund for when you are no longer generating an income.

FOUR SIMPLE STEPS FOR SETTING
FINANCIAL GOALS

Step 1: Identify and write down your financial goals, whether they are saving to send your kids to college or university, buying a new car, paying off credit card debt, saving for a down payment on a house, taking a vacation or planning for retirement.

Step 2: Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals. This will make the process easier.

Step 3: Educate yourself and do your research. Read Money magazine and books about investing and wealth creation, surf the Internet's investment web sites. Then identify small, measurable steps that you can take to achieve these goals, and put this action plan to work.

Step 4: Evaluate your progress regularly. Review your progress monthly, quarterly, or at another interval you are comfortable with, but at least semi-annually, to determine if your program is working.

If you're not making a satisfactory amount of progress on a particular goal, re-evaluate your approach and make the necessary changes.

There are no hard and fast rules for implementing a financial plan.

The important thing is to do something as opposed to doing nothing, and to start NOW!

Long-term goals (over 5 years) are those things that won't happen overnight, no matter how hard you work to achieve them.

Because they may take a long time to accomplish give yourself a reasonable amount of time based on your best estimates of what it will take to achieve them.

Examples of long-term financial goals might include college education for a child, a retirement plan or purchasing a home. Whatever the case, these goals generally require longer commitments and larger sums of money.

Intermediate-term goals (1-5 years) are the type of goals that can't be executed overnight but might not take many years to accomplish. Examples might include purchasing/replacing a car, gaining additional educational qualifications or certification, or paying off credit card debts.

Short-term goals (within one year) generally take one year or less to achieve, based on the date the task is needed, the total estimated cost, and the required savings.
Remember: If you fail to plan you are planning to fail!

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Success Goals Are Smart And Dumb 
by M. McClure

Back in 2000 I set a goal of passing a very difficult Information Technology certification - the Cisco CCIE. I achieved it after almost 3 years work, 3 failures at the test and the investment of a lot of time and money.

It was both a SMART goal...and a DUMB goal.

It was S.M.A.R.T. in that:

• I SPECIFICALLY set out to achieve and pass an examination with a known pass mark.
• It was MEASURABLE in terms of the certified status and the professional recognition that goes with passing it.
• It was ACHIEVABLE because my company and I built a structure consisting of training courses, equipment and time to study.
• By breaking up the study topics and learning from each failure I was able to get there in the end.
• It was REALISTIC in that a lot of my day to day work was directly related to the exam syllabus and so I was both inspired and encouraged by understanding more about my "bread and butter" knowledge.
• It was TIMEBOUND because I set a deadline for each exam attempt, booked the day some months in advance and told my peer colleagues of my intentions.

When I failed, I licked my wounds, set another deadline and got back into the studying saddle.

Now as for D.U.M.B. goals...

• This was a DOODLE goal in that I spent almost all my available spare time thinking about it and playing with the myriad test scenarios and questions.
• On the train, in the bathroom etc. It also helped that my day-to-day work involved the practical application of a lot of the ideas and theories I was immersed in.
• The goal had UNLIMITED time in that it was effectively an extension of my vocation. It was as much for the pleasure of working toward and finally achieving the goal as it was for any increase in salary or peer recognition.
• MADNESS factor - well I'd have to be a wee bit mad to sit up until 3am doing practice exercises or spending $$$ moolah buying my own equipment to practice on - and feeling good about it.
• BEST EFFORT - 80% was good enough to pass. I did my best and moved on as the syllabus was massive and study time limited.

Still, many iterative passes at the material slowly but surely raised my game. All things considered -- SMART + DUMB had only one intentional outcome in mind: Success.

Be smart. Be dumb. Be successful.