I traditionally write an article regarding goal setting and how to achieve your goals at this time of year, and I guess this year will be no different. What is a little different for me personally, is that a lot has changed in the last couple of years. For example, both my sons have married (which means they aren’t my problem any longer ha-ha) and I now have a granddaughter. These changes change what has been the main focus of my goals for thirty years. So, this year instead of tweaking my plan and goals I’ve done a complete overhaul. That doesn’t change my process though.
Let’s focus on process. For me the process of goal setting starts by breaking my goals into categories. How many categories should you have? There is a balance; if you have too few it makes it hard to get specific about your goals, whereas too many could make it hard to keep up with them. Personally, I like between 4-6 categories. Here is an example of categories you might use in your goal setting plan:
Once categories are determined, then start defining goals under each category. Try and keep it to 2-3 goals per category. Once you have the goals defined then create specific tasks that need to be accomplished to reach the goal. Also, set milestones for each goal.
Sounds simple, right? It does become easier if you use a system to manage your goals such as SMART. Breaking everything down into manageable chunks is what makes the goals attainable.
Here is an example of how to break down a big goal down into workable chunks:
Let’s say the goal is under the investing category. The goal is to have three million dollars in cash and assets by retirement age. Great Goal! but how do you get there? By being specific. Here is a quick example:
1) What is the breakdown of the three million among assets?
- 2 million in real estate
- $1.25 million in real estate which creates a positive cash flow of $7000 a month
- $750,000 in home and vacation home equity.
- $500,000 – in stocks and bonds
- $250,000 – notes secured by real estate
- $250,000 – in cash or cash equivalents
2) The goal must also have a time milestone associated with it also. You could say that the time associated with the above goal is “retirement” but that is not specific enough. How long until retirement age? Depending on who created this goal it could be anywhere between 50 and 5 years. We will use 15 years for this example.
3) Now take each goal and create the necessary steps to attain it. For example:
1.25 million in investment real estate with a positive cash flow of $7000
- purchase real estate with a projected future value of 1.25 million
- create a cash flow analyses (like the one contained in the Rental Deal Tracker) for 15 years out
- have the loans paid off in 15 years
- make an extra payment each year which will cut three years off the loan or
- Refinance the loan to a 15 year loan.
Diana D. Hill – firstname.lastname@example.org