Ah, the week between Christmas and New Year’s. The best week of the year, assuming you don’t like getting anything done. And if you don’t like gettin’ crap done, what’s wrong with you? Oh, laziness. Of course.
The blog world is similar. Many writers take the whole week off, justifying it by saying nobody’s going to read their stuff anyway. Even YOUR BOY Nelly took three days off, a long-ass time for this workaholic. Don’t worry, I was still doing stuff behind the scenes.
Other bloggers (personal finance ones, especially) decide that this week is a perfect time to reflect on 2016 and come up with some financial goals for 2017. These can include anything from tackling a mountain of debt to becoming slightly richer, with everything in between. Normally these will also include blogging goals, because, hey, who doesn’t like to see the sausage made?
I’m convinced the main reason why these blog posts exist is fodder for the writer, a plight I can certainly sympathize with. I’ll probably write between 1,000 and 1,200 articles next year. That’s a lot of topics. Add in a regular bi-monthly update and that’s a nice start to the ol’ editorial calendar.
The problem with financial goals
There’s a reason for writing down goals for the whole world to see. Such an action does make one more accountable. It’s been proven by SCIENCE!
But at the same time, goal pass/fail rates are abysmal, something that happens for a number of reasons. Targets are often wildly optimistic, causing people to get discouraged. A year is a long time and plans can be altered. The things we value constantly shift and change too.
A big thing affecting most people is they spread themselves way too thin. Instead of focusing on two or three big accomplishments they set ten or twelve goals of varying importance.
My favorite example of this is reading challenges. It isn’t enough to read because you enjoy it or because you get value out of the activity for these folks. It’s all about maintaining a certain volume. Even if it does suck the fun out of a leisure activity. Besides, if someone really enjoyed reading, they’d find a way to fit it into the schedule.
That’s the way all values work, actually. If you really want to do something it doesn’t matter how many times you write it down or tell the rest of the world you’re gonna do it. Sure, all that helps, but ultimately the impetus of change comes from within.
How I’m approaching it
I’m on the fence about personally making financial goals. I suppose it’s something the wife and I will have to talk about, a conversation I’ll ruin with farts and
terrible fantastic jokes.
I do have a couple of long-term financial goals I focus on. The first is getting a net worth of $50 million (nope, not a typo), which is something I hope to hit by the time I’m in my early 70s. That’s a long way off, so I have an intermediate goal of growing my net worth by 10% a year.
The intermediate goal is a little tougher to hit because a lot of it depends on the stock market. If stocks are up like they were this year, I’ve beaten my goal. Our net worth increased closer to 15%, and that’s even before December numbers are official.
And that’s it. Those are my two goals, with only one being relatively short-term.
Next, I focus more on systems and less on results, something I learned from Scott Adams. Yes, that Scott Adams. The crazy nutbar Trump supporter (who, by the way, did a far better job predicting the election than the smart folks paid to do so). Adams is less about goals and more about what you’ve gotta do to get there.
Say you want to increase your net worth 50% this year, going from $25,000 to $50,000 in the bank. Okay, great. How are you going to do this? The answer is simple. It’s going to be mostly savings. Thus, you’ve got to save $22,000 to get there and then earn an additional $3,000 from investments.
Good start. Now let’s break it down even further. How are you doing to save $22,000? Will it be by spending less? Earning more? A combination of the two?
Say the solution is to save an additional $11,000 and earn an additional $11,000. Now it’s time to break it down even further. How will you save $11,000? It’s going to take some drastic changes to do that, assuming you go from $0 to eleven g’s. It might mean getting rid of your car or downsizing into a cheaper place. Do the same analysis for earning more.
The system I use
Here’s what I do. If I set a financial goal to increase my net worth 10% I can do so in two ways — savings and investment returns.
I start with savings. I can’t save enough to bump it up by that much, but I can save enough to get a 5% increase. The other half comes from investment returns.
I then break both down even further. Saving is easy for me at this point, so I don’t spend a lot of time there. Investing is where I spend most of my time these days. So I do things like setting aside time to analyze potential investments. I’ve also decided this year to join a couple of local organizations to expose myself to more local opportunities. And so on. This can get really detailed if you let it.
The bottom line
Financial goals are all fine and good, but as we often do, we take a good thing and slaughter it to the point where it’s unrecognizable.
Instead of spreading yourself thin with a dozen goals, focus on one or two. And rather than focusing on the result, spend more time figuring out what steps will get you there.