Setting goals for yourself
Setting goals helps you to reach out to your vision (your dream).
Earlier I wrote about 7 essential mindset changes to become financially independent and about my own vision for my life. I strongly recommend that you read it first. Without a vision, you actually won’t set goals properly.
Why is setting goals important?
Setting goals helps you to design and adjust your life.
First of all, changes will keep coming because life is a process and never static. Our financial situation can vary widely depending on what choices we have taken and what our lives have brought us.
Relationships can go up and down and a divorce can have high costs. Our body can be sick and you may need expensive treatment to get well.
Everything life brings will keep changing and your goals will be guiding you to take charge of these changes.
It’s important because it will give you more power in the direction of your life.
Different kinds of goals
To become financially independent in the future you must be intentionally and committed. That means in every part of your life you must consider how it will bring you closer to your vision.
When you are setting goals for yourself then you need to look at the whole picture.
You must consider what can make the biggest difference for you. Let them work together in the direction you wish.
The wheel of the financially independent
There is a tool from Buddhism for a personal development called “The wheel of life”.
It helps you to reflect on different areas of your life.
Using it you will be able to set better goals to balance your life.
I made my own version to become financially independent and you can get a free tool template 🙂
Just download it here:
The wheel of the financially independent tool will cover the very important question:
What you have been
prioritizing so far?
Here is my wheel
The rate goes from 1 – 10 and it needs to be balanced around the center.
The more you have of something the higher rates you give it. In my wheel, you can see that there are imbalances.
I’m going to improve the physical environment, family, health and my saving rate.
Let’s have a look at every area in the wheel:
- Do you have an income that is sufficient to cover expenses while investing?
Yes, my income is all right.
- Will it be beneficial for your overall life to increase your income?
I still work on increasing my income because I think there are potentials for more.
- Do you have a sufficient saving rate and can you set aside each month?
Yes, but not enough.
- Do you have investments and have you studied investment?
Yes and yes I’ve done a lot of research.
- How are your investments doing?
Just fine, but I think they will have higher returns in the future.
- How frugal do you feel?
I’m a lot more frugal than before. I feel that I’m frugal.
- Are there areas where you can be more frugal?
Yes. I need to figure that out and learn more.
- How is your health?
It’s going better but I’m still working on it.
- What do you do to keep you healthy?
I’m a vegan and do exercise 2-3 times a week.
- Do you feel comfortable at home and at work?
Yes but mostly home.
- How are you doing during the day?
I have some pressure on me from work that needs to be addressed.
- How is the area in which you live?
It’s all good but I would love to have a garden.
- Do you study important knowledge every day?
Yes, every day.
- Do you take notes in a journal?
- Do you add new things you discover to your life?
Yes very often.
- Are you motivated and are you setting goals?
- Is your family also included?
My wife could be a lot more into it.
- Is your family supportive?
- Are your ambitions being held back?
How to set goals for yourself
When making your own wheel, remember to be honest with yourself so that you can set the right goals afterward.
This tool is for you and no one else.
Score 8 to 10 is awesome however it’s important that you don’t set a limit for yourself for even further growth. Next time you do the evaluation you may look different on it if your potentials are even bigger.
Score 5 to 7 is satisfying but there is still potentials for more.
Score 0 to 4 is inadequate and you need to work on these areas to fulfill the wheel. These areas have the most room to grow and your goals should cover these areas. It’s not always a bad thing to have a low score and it might be because you didn’t fully explore your opportunities and potentials.
💡 Use the tool and make your own financially independent wheel
My personal goals
I have divided my goals into 3 future periods that are related.
The short-term goals are in the following 2 years and they lead to the next 2 years called the mid-term goals. They are most in my focus.
My Mid-term goals will replace my current short-term goals when they are reached and I will make new mid-term goals.
Finally, my long-term goals include my vision and are in 10-12 years, but they are a bit harder to measure in time.
My short-term goals (2018-2020):
- Have a 6 months emergency fund
This will also give me +1 in score in the area “Saving rate”
- Be able to save 50% or more of my income (including additional debt payment)
When I reach this the area “Saving rate” will raise +1 in the score
- Pay off my student loan
This will give me +0.5 in score in the area “Saving rate”
- Pay off my leverage loan
This will give me +0.5 in score in the area “Saving rate”
- Have 6 P2P lending platforms in the portfolio
This will give me +0.5 in score in the area “Investment”
- Have a 20% growth in my income streams
When I reach this the “income” will raise +1 in the score
- Complete a fitness training program
This will give me +1 score in “Health” when I finish the program. Using it at home afterward will maintain +1
- Walk outside during work every Monday (My longest working day during the week)
This will give me +1 score in “Physical environment” if it makes a change for me in the next half year
I have prioritized “Family” low without any goals because I can’t focus equally on every area at the same time.
Once these goals are achieved, I will again evaluate and make a new wheel to progress even further.
My mid-term goals (2020-2022):
- Be in step 5 towards financial freedom
- Be able to save 70% or more of my income (including additional debt payment)
- More diversification with at least 25% of my portfolio in Index funds and 5% in cash (opportunity money)
- Have another 20% growth in my income streams
My long-term goals (2028-2030):
- Completely debt-free (also mortgages)
- Have 2000 EUR (2450 USD) in assets every month
- Have rental properties in my portfolio
- Become financially independent
💡 Set your own goals. Start with the long-term goals, then mid-term goals and finally short-term goals.
When you’re setting goals remember they must be measurable, reasonable, rational and compatible with your vision.
Also, adjust and evaluate your goals sometimes depending on what matters to you.
Working on your short-term goals every day
Long-term goals and even mid-term goals may seem unmanageable and overwhelming.
It is very important that you focus more on your short-term goals as they are closer to your current reality.
The task is smaller and it also gives greater motivation to have a goal that is within reach.
Remember to have goals that are connected and directed towards your vision of being financially free.
Every morning I make a small list of daily goals that I want to achieve.
I write them down on a small paper and have them with me during the day. This brings me closer and closer to my goals.
Unfortunately, sometimes I don’t achieve my daily goals but I still had the focus on what’s important to me. I try again the following day.
💡 Write daily goals for yourself but be realistic and do your very best to prioritize them
The effect on your belief system
You must be aware of your goals in your daily life and make an effort to reach them.
Beliefs arise from experience and your thought patterns will start to change when you work on your goals daily.
It won’t happen overnight because everybody has a belief system that they utilize and it is through this mechanism that we individually “make sense” of the world around us.
You certainly need to be consistent and in time positive response patterns will be a part of your unconscious mind.
The unconscious mind handles all functions in your body and is programmable. You can by repetition program your mind to react different (think different) without you even notice it.
Many are absorbed by entertainment programs, computer games, and other consumer products.
Your priorities will determine the direction your life takes and how you think about yourself and your life.
I strongly recommend that you reach out for your daily goals and spend your time wisely and always positive.
Your conscious mind must be at work with the goals daily.
It’s actually only 12% of your brain (the tip of the iceberg) and it has no long-term memory.
That means you need to work on yourself every day to trigger new positive habits in the unconscious mind.
In the blog post, about 7 essential mindset changes to become financially independent I wrote about how you can feed your brain daily.
It basically works in the same direction as goal setting. Together it will work on different levels to make you positively progress and become financially independent.
When you start breaking down any doubts about yourself and create stronger thoughts everything will start to change.
Your brain will be rewired by this repetition and you will become a better version of yourself.