Although goal setting is usually associated with the new year I do feel it is important all year round, especially keeping track of your goals already made. I do believe in SMART goal setting.
So all goals either big or small should be made based on the SMART acronym:
SPECIFIC - write a clear concise goal.For example, financial freedom is not a clear goal as financial freedom might mean passive income of 1000€ a month for me, but totally different amount to someone else.
MEASURABLE - it should be clear when you have reached a goal, and if possible the goal should be something you can track throughout the time you are working on it. So losing weight is not a good goal, as it is measurable but not specific (does not give you a target). Losing 10 kg is a clear and measurable goal. Writing a book is specific but not really measurable as a book is something you could work on and improve your whole life. But writing a 100-page first draft by a specific date is a measurable goal.
ATTAINABLE - making goals attainable is also extremely important. Making them too hard means you lose the drive to go for it when it becomes clear you will not be able to achieve it by the deadline. Also postponing deadline will set a very bad example and should not be done. Better is to rephrase the goal all together. Also making them too easy makes them uninteresting and also if you reach them you do not feel the empowerment from reaching an easy goal. So the trick is to set goals that are just hard enough.
RELEVANT - a good goal is something that is relevant to you. Goals set perhaps because someone else wants you to do something will have much less chance working, compared to the same goal if you truly want to achieve this yourself. For example, pressuring someone to quit smoking is quite unlikely to work, but the same person might quit smoking if they feel the need to do so themselves.
TIME-BASED - to keep track of goals it is important to give yourself clear deadlines. Deadlines keep you on track and for goals which need more effort, I feel it is good to give also sub-deadlines. Even if they are just mathematical goalposts they help to keep you motivated on longer goals. This is especially helpful for me, as I tend to be the person who procrastinates and then does all the work on last night day before the deadline. I know I should change that and clear goals are a way to do that.
What kind of goals I have? This year I have 2 main financial goals:
1) to have earned 1000€ from my investments by the end of a year. This goal is clearly based on SMART goal setting. Mathematically this means earning a bit more than 83€ a month- this is good as it gives me monthly subgoals. I exceeded this in January and fell short in February, but the two months together were over 166€, so all is good for now. We will see how the current month goes. As I have quite some investment which does not pay out monthly the months are quite uneven. Last year the yearly earning was about 628, so I am going for almost double the amount. Wish me luck!
2) to have my portfolio value 15 000€ by the end of the year. This is also mostly a smart goal. The main downside might be attainability. My portfolio value was about 12400 on December 31st. I am sure I can deposit 2600 in a year or about 215 a month (~20% of my wages), but as portfolio value also is dependant on the markets I might need to invest more than that. My TVEAT is almost -500€ and also most of the ETFs are in the red, so a great time to buy, but hard to keep portfolio value increasing. We will see, I am hopeful.
Also, I tend to set small goals on tasks I tend to put off. For example, Estonian income tax declaration deadline is 2.04 this year. So I told myself I need to do it at least 1 month before that. I succeeded but it was a close call as one of the CrowdEstate companies did not send in the tax info as promised and it took some emails to get it on my tax return so I could actually submit it. Now all I have to do is pay the 20% by 1st of October- another goal to pay it at least 10 days early. But not earlier, this zero interest loan from the state is a good thing :)
Possible other financial goals to go for, just to give you some ideas:
- Save up a 3 (or 6) month emergency fund on a separate bank account by date;
- Have a zero spend month;
- Read x amount financial books in a year;
- Pay up a loan you have by a date or if the loan is too large set a short time goal to pay back a certain amount;
- Save at least 5% of your monthly income and if possible invest it (it is easiest to make an automated transfer on your payday to investing site or to separate bank account so you do not even see the money and won't miss it) or;
- Save and invest 1% of your income next month and increase this every month by 1% until you find a level that is sustainable for you;
- Pay up all your credit cards by date (or start from one card but plan to pay up all);
- Listen to at least 2 (another number) episodes of financial podcasts in a week;
- Figure out a way to earn x amount of extra money outside of your normal wages and invest it;
- Do a budget and follow it for a month or alternatively just track all your expenses for a month and make conclusions to improve your spending habits;
- Learn a new skill to improve your career;
- Find a zero spend activity you like and add this to your schedule regularly (possibly to replace an activity you spend on), like walking, going to free cultural event x times a month etc. For example, some museums have a free entrance day once a month, town districts have regular free musical events etc.
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