Yesterday, I encouraged you to sit down and develop your Ultimate Financial Goal. Today, I’ll write about the next step in our week long series about Setting Personal Finance Goals.
Disassemble The Dream
As I mentioned yesterday, our ultimate financial goal is really our ultimate dream – where we would like to be, a what we would like to be doing at some point in the future. Today, we have to disassemble our dream, break it into its constituent components, so that we can then figure out how to best achieve our ultimate goal. For this, we will need to take a look at the drawing we created yesterday.
At the center of my drawing, there is a picture of a house. The house sits in the middle of a nice-sized yard, is surrounded by several neighboring houses, and is just the right size to have grand kids over during the holidays. The first component of my ultimate goal becomes my first long-term goal. I want to own a paid for house that I can live in after I retire.
Also on my drawing, there are pictures of a golf course, a church, a family-tree, and a vacation home. Using these pictures, and adding them to the goal of owning my own home, I have now created five, practical, long-term goals.
While I am at it, I’ll prioritize my long-term goals, and list them here –
- Own My Own Home For When I Retire
- Share Financial Blessings With My Family
- Share Financial Blessings With My Church
- Enjoy Life Through Recreation
- Own My Own Vacation Home
I’m sure that you can see what I have done here. I’ve taken my dream, my ultimate financial goal of being financially independent, and I’ve brought it down from “the sky” and given it some “reality”. Now, instead of one hard-to-define dream, I now have five, concrete, easy-to-define, long-term goals.
Not only have I developed some long-term goals, I’ve also prioritized them. My reasoning is rather obvious. I may not have enough money to accomplish goal 5, but I want to be sure that I have enough to accomplish goal 1. Yes, we want to dream, but we also want to be realistic in our planning. If the recent economic meltdown has taught us anything, it is that life is unpredictable. All we can do, in reality, is to create our plans, work hard to achieve our goals, and move forward. Personally, I am trying to create long-term goals that are realistic, regardless of the state of the economy.
From this post on, we’ll simply take the above detailed process, and learn to apply it to each of our long-term goals, disassembling them and creating intermediate-term goals, short-term goals, and daily-goals. The process, at each step, is the same. I’ll also discuss those pesky goals – like paying for our kids to go to college, or buying a newer car – and how those types of goals relate to our long-term goals.
These first few days, we have really been inside our own heads – dreaming, planning, goal setting, and thinking about the future. Tomorrow, we begin the difficult process of figuring out what we actually have to do in order to achieve, in many cases, some rather lofty goals.
Debt Reduction Book Giveaway –
Don’t forget, as part of this week’s series on Setting Personal Finance Goals, I’m giving away five debt reduction books. Click over and find out how you can be eligible for a chance to receive your very own free debt reduction book.
Final Notes –
As you list your long-term goals, you may notice that your list just keeps getting longer and longer. For right now, try to keep your list limited to less than 10 long-term goals. Tomorrow, I’m going to delve into the difficult task of prioritizing long-term and intermediate -term goals. For instance – How do we balance college funding for the kids (an intermediate-goal for most) with a long-term goal, such as buying a vacation home? Right now, create a list of long-term goals, goals for that time in your life usually defined as retirement.
As I work my way through this series, I can actually see it blossoming into a 2-week-long project. What sounds like a simple topic – setting personal finance goals – is actually a very complex topic, one which fascinates me. I hope you are enjoying this series, and I really do appreciate all of the positive feedback.
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Nice post; I think I am having problems coming up with dreams in general recently… might be why grad. school is bumming me out lol.
That does sound enjoyable =)
I look forward to seeing how you describe weighting and balancing..
Nice post, by the way I have try it, but still process…
I hope your blog give every one solution finance…..
NCN,
You want to retire? That is old hat =). To me retirement brings pictures of people who have slaved at a job they hate for 30 years just so that they can finally ‘enjoy life’ at a point were there bodies and past their peak.
For me, my big dream is to be financial free so that I can pursue the job and tasks that I want. ‘Jobs’ that I won’t want to retire from. Those tasks are things like debt counseling, non-profit work, entrepreneurial work, volunteering, helping others, etc. That dreams breaks down into own a paid for house and having passive or semi-passive income streams doing things that I love.
Great post. This stuff is hard to tackle.
I, too, want to be financially free.
Retirement isn’t my goal – I can’t imagine slaving for years at something I hate.
My ultimate goal is to do the things I enjoy until I can’t get out of bed anymore.