Ah a new year. We usually start these times full of hope about making changes to our lives (ie: diets, cleaning up the house, actually saving a bit more). So while we are all feeling a little introspective let’s look the heart soul of all personal finance: goals.
Let’s face it you don’t start steering a ship without knowing where you are going and personal finance is just the same. Yes you could make a budget, start saving and start investing today. Yet to do so without knowing where you are going is just begging to have it all blow up in your face (ie: investing money in the stock market during last summer that you need later this year would have been a bad idea).
So what is a goal? First off, for maximum results, I suggest you tend to think in terms of experiences or states of being rather than stuff. Wanting a new flat screen TV is a fine goal, but a little short sighted compared to what I’m getting at here. I want you to look at your life and determine what you want out of your life in 10, 20 or more years. Think big.
Do you want to own a business, have a rental property, change careers to something you really enjoy but pays less or perhaps you just want a bit more time to do your own things? Do you want to learn to speak another language and then take a related trip? Do you want a child or perhaps more time for the kids you already have? If you had to redo your life right now what would you change? What would make you more happy? Once you know that then start brainstorming ideas to get you there. There isn’t a right answer here. For some people the answer is just simply knowing we are going to be ok during the coming year.
Mine is fairly straight forward. I want time. Lots of time. I have far too many interests to be stuck working a 40 hour work week until I’m 65 to retire. So I’m after FIRE (financial independence or early retirement). Basically I want to get to the point in my life where earning an income from a job is a completely optional thing to do.
Yet I’m aware that is going to take some serious time and effort to get there (at least around 15 years). So in the in term I’ve got two other goals:
- Be ridiculously happy in my own life.
- Try to live my life to leave the world in better shape than I found it (ie: try to live a low consumption lifestyle).
Ironically I’ve found my two interim goals are actually self reinforcing towards getting to FIRE. By making sure I’m focusing on my happiness now I tend to value time spent with others (ie: spouse, kids, family and friends) and I spend my time to work on projects that interest me (often writing or reading something new) rather than buying stuff. Then by living a low consumption lifestyle I tend to really examine my purchases before spending money, so what I do spend tends to focus on what I need with the odd item that I really want tossed in.
All in all it works for me. It’s not perfect and my very short term goals change all the time, but in general I can steer my ship. So how about your big goals? Did you alter anything in 2009 or add a new goal?