It is the season for setting goals, and if you frequent the various corners of the online personal finance community, you should be well aware. While it is important to evaluate your goals, and performance, continually, a new year is a good an opportunity as any to assess and reset your goals. Circumstances or preferences may have changed to the extent that you need to revise all your personal goals.
But, before you finalise your goals, have you thought about whether your goals are good? An often overlooked fact, is that all goals are not equal. Some will help you improve, by motivating you, while others will steal away any inspiration before it even reaches your mind. So, if you haven’t set your goals for the coming year just yet, make sure to read on for some valuable advice. And, if you already formulated goals, well, there is no reason not to refine and improve them.
The Characteristics of Good Goals
There have been quite a few profiled writers, especially within what could be characterised as the “self-help” scene, that have focused on goals in recent years. James Clear famously tells you to ditch goals for what he calls systems. However, if we boil it all down, this is just a roundabout way of saying that you shouldn’t set goals without having a clear idea of how you are going to achieve them. It seems entirely evident on contemplation, yet so many fall into the trap of setting vague goals without any thought to how they will realise the goals.
Consider the following goals, of which I am certain you have seen examples in the recent weeks:
- “In 2017 I am going to save money.”
- “Next year I am going to get into shape.”
- “I will spend more time with my family the coming year.”
All of these are terrible goals for a multitude of reasons, and will in all likelihood serve to make you feel worse about yourself regardless of what you achieve in the coming year. And, as mentioned, goals of this variety are often set without any regard for how they will be realised. Approaching goals without considering the how is particularly destructive because it reduces setting goals to a vague state similar to dreaming. In fact, while goals have other advantages, the planning and contemplation associated with defining the goals are perhaps the most critical values of all goals.
With that in mind, as well as the aspect covered in the previous post, Start With The Why , which is highly relevant to goal-setting, you already have a good framework for setting goals that are helpful. Be clear about why you want to achieve something, and give proper thought to the how. In fact, you should document both of these aspects in written form.
We can use the “SMART” acronym to validate further that the goals we have set for the coming year are good enough. Each letter signifies a property our goal should have:
- Specific: Our goals should be specific, and describe a particular future state, as opposed to vague depictions that have more in common with dreams than well-formulated goals.
- Measurable: If you cannot measure whether or not you have reached your goal, and quantify your progress, you need to rephrase it. Instead of saying that you will save money next year, state exactly how much money you want to save.
- Ambitious: While reaching your goals is good, there is little value in getting there without adversity and sacrifice. Make sure that your goals are ambitious enough that getting there actually contributes to your why. If you wish to reduce mindless consumption and increase your freedom by saving money, setting aside a couple of percentage points of your salary probably won’t contribute.
- Realistic: Conversely, setting a goal that is beyond your reach is a sure-fire way of making sure that you will lose motivation before long. Aiming to save a million dollars is good and well, but having that as a goal unless you have a real chance of reaching it will only be detrimental with regards to your why.
- Time-specified: Actually, pretty much everyone can save a million dollars with a conscious approach to how they manage their finances. So if that’s what you want to achieve, consider how you are going to do it, and set a deadline for when you want it done.
My Personal Goals for 2017
The overarching theme of what I want to change in 2017 is to be more conscious about how I spend my time and my money, which can be summed up as read more, write more, play more, and save more. While I am financially far more responsible than I was just a couple of years back, I have yet to reach that same consciousness with regards to how I spend my time. I spend far too much time loitering around on the web without any purpose, and I probably still watch a bit too much TV.
I have decided to split my goals into three categories: Personal, health and fitness, and finances. Before I present my goals, it feels important to throw in an apropos: These goals are set from the perspective of my life as it is today. If all goes as planned, however, a tiny human will be joining our household the coming summer. My experience with tiny humans is very limited currently, but I do have a hunch that the arrival of one might spell some changes in my life. We will see, come the end of the year.
When it comes to personal goals, it is all about expanding my horizons, acquiring new knowledge, and expressing my goals. I want to live life fully, but on my personal terms. What those terms are, however, should always be questioned, examined and put to the test. I value freedom and the ability to choose how I wish to spend my life, but those things have little meaning at all unless I am exploring the world as well as the insides of my own mind.
Read at least 20 books from cover to cover: I never read as many books as I’d like. While I read a lot, especially online, both long and short form articles, tweets, comments and what not, books offer a coherence and immersion that you simply don’t get from anything else. That is why I want to switch out some of my randomly-surfing-the-web time for reading books and increase my total books read to at least 20 during 2017, up from a measly 12 in 2016.
Write at least 50 new posts for Abovare: If reading takes you inside new and strange worlds, writing is a way of sharing the world inside your head with the other people. It improves communication, language skills and understanding, and writing, sharing and, in turn, teaching is probably the ultimate step in increasing your knowledge of a particular subject. By writing here at Abovare, I hope to make new connections and share my expertise, but, ultimately, it is a learning process for me as well: I want to master the field of personal finance, and everything that surrounds it. And what better way to do that than putting my knowledge to the scariest test of all, that is sharing it?
Practice the guitar four days of the week: Music is an important aspect of my life, and I spend a lot of time listening to music. While I believe we have the ability to express ourselves creatively through everything we do, playing the guitar is perhaps my most important creative outlet. My skill set is just not good enough to do all that I want to do, and that is something I strive to improve. Formulating a decent goal in this regard is difficult, which is part of the problem I suppose, but as it stands the aim is to practice on the guitar at least four days of the week.
Health and Fitness
Knowing what you want, and having the financial means to do it, means nothing if you lack the health to do it. I like to stay in shape by running and, during winters, going cross-country-skiing. There is simply little that compares to pushing your body to your limits, outside and as a part of nature. To properly govern my health, I need to exercise and improve my body strength in addition to doing cardiovascular exercise, so that is something I must look to incorporate into my training program for 2017.
Complete at least 120 workout-sessions: I was right on track to achieve my goal of 100 sessions in 2016, but falling ill for the two final weeks of the year made me come up just short. For the coming year, the goal is to increase the number of sessions slightly, as I will try to incorporate body strength sessions, as mentioned, in addition to the running and skiing.
Run at least 1000 kilometres: The exact distance I ran in 2016 is a bit unclear, as the tracking software I used doesn’t differentiate very well between running and other activities. 1000 kilometres is a reasonable goal, however, as it is both a step up from last year but at the same time entirely achievable within my current workout programme.
Bonus goals: Finish a 10K in less than 40 minutes and finish a half-marathon in less than 1 hour and 40 minutes. These aren’t goals I am working actively towards achieving, but reaching them would be signs that the training I am putting in is yielding results.
Oddly enough, given that Abovare is a website focused on personal finance, these are the goals that need the least attention. Years of establishing routines, budgeting and tracking incomings and outgoings have given me a reasonable level of control. That said, there are changes on the horizon with a little one on the way, making it more important than ever to maintain control. I have therefore defined goals that I believe will further solidify my financial situation, and increase my freedom and ability to lead the life I want for my family and me.
Increase year-over-year net worth growth with 50%: I am still very much in the accumulation phase when it comes to building wealth, and 2016 was a good year in that regard as I was able to increase my net worth significantly. I hope to expand further that growth in the coming year and have positioned myself to do that by, among other things, starting a new job at the turn of the year. One factor that could affect my ability to reach this goal is the (ridiculous) local real-estate market. As that is entirely outside of my control, and doesn’t change my short to medium term financial outlook, I am excluding the value change of my primary residence when it comes to calculating my performance. (Interjection: Yes, I do include the value of my primary residence when calculating net worth, and I believe it is the only sensible thing to do. I will be writing an article on this subject soon.)
Invest 10% of my take-home pay in the stock market: While 2016 was very much about reaching my minimum liquidity threshold (Unsure what this means, exactly? Just read The Basic Principles of Personal Finance), I need to increase my exposure to the market in 2017. I am not confident enough to direct my entire free cash flow towards investing, but 10% of my take-home for the year should be the absolute minimum.
Establish a concrete plan for building a new source of income: 2017 will be an exciting year, as I am starting a new job, will be sinking some time into Abovare, and am starting a family together with my spouse. Between this, and trying to fulfil my other goals, I don’t foresee having an excess of free time. That is no excuse for not working on one of the staples of financial safety, which is diversifying your cash flow. I am currently painfully dependent on that one job that brings in the money necessary to live the life I have constructed, and that is not a very safe position to be in. It is, therefore, imperative that I start building other streams of income as well, and the goal for 2017 is to lay out a concrete plan for establishing another revenue stream in 2018. Landlording, Amazon affiliate sales through niche websites, or trying to get in near the top of the next MLM-pyramid? That is for me to decide during 2017, and 2018 will be the year of execution.
Those are my goals for the coming year. Have you formulated yours yet, or are you still working on them? Feel free to share your goals in the comments below, or join the discussion by tweeting @Abovare, or leaving a comment on the Facebook page.
Header photo by Thomas Leth-Olsen.