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10 Apr 2017


I must have told you about the guy who goes beyond the exercise of setting financial goals by framing and hanging them on the wall of his home office. He takes pleasure in seeing his goals on display daily. I don't quite do that, but it seems to do wonders for people as visual as the guy. I myself am a goal driven nutcase. I can never achieve anything without intentionally setting a goal for it. I am currently re-building on my emergency fund for instance. I have committed to a specific amount that I save every month towards my maximum emergency fund. Without that commitment, I tend not to be consistent. I can be that messy.
setting financial goals
I advocate for goals that are challenging enough to push one where they are aiming to be, but yet attainable. Whenever I plan to achieve a financial milestone, my goal states the amounts to be saved and/ or invested with target returns. The idea of SMART (specific, measurable, attainable, result-focused and time-bound) goals will never get out of fashion. I have a detailed explanation of SMART goals which entails writing goals down, setting targets and celebrating every milestone achieved below.

  • Specific. You most likely have different goals at any given time. The "my goal is to build wealth" is a goal too broad and overwhelming to work on. I have heard of this particular one far too often in my wealth class. A smart goal is more specific than that. When setting financial goals, one needs to break a goal down with an attempt to respond to their own "What", "Why" and "How" for specificity.
What is my goal? My goal is to earn high rental income.
Why this goal? I need high rental income to supplement my current income and invest for early retirement.
How will I achieve this goal? I am saving through a high interest investment vehicle towards acquiring my investment property. I am currently saving R5000 per month. I am also working on improving my credit rating to increase my chances of getting charged low interest by my lender of choice.
It does not get more specific than that.

  • Measurable. The measurability of your goals enables you to track your progress. This is the only way that you can have an evidence of the work you are putting towards achieving your objectives.
Let's take our rental income goal as an example. The investment property will only be purchased in exactly two years' time. Break this goal into smaller targets goes:
  • Monthly:- I am saving R5000 every month to build towards my deposit.
  • 6 Months:- To improve on my credit rating I am paying all my consumer debt off by month 6. I will also be having R30,000 plus interest at this date.
  • 7 Months: In month 7 I am getting a new credit card that I will take great care of for the purposes of improving my credit score.
  • 12 Months: By the end of year one, my credit rating will have improved to excellent. I will be having over R60,000 in my investment account at this time.
  • Year 2: I will be having extra income to boost my savings at month 13. By the end of year two I will be having R240,000 in my investment account.
You must be getting the measurability point of this post. I do this a lot. I go to an extent of adding interest to my excel spreadsheet. This makes the goal tangible and motivates one to work harder to achieve it.

  • Attainable. I have come across a lot of people who have dreams that remain dreams purely because of lack of their dreams attainability. We all wish to achieve stuff but it takes a bit of time and proper planning to get where we want to be. We have to be millionaires before we become billionaires, unless of course we win lottery. Our current goals cannot be to be billionaires in a short space of time whilst we have not even attained the first R1 Million.
Having said that, your goals should challenge you. Easy will not cut it either. Remember to break your goal down into smaller targets. This enables one to determine how possible achieving their goal is. Always remember to start where you are when setting financial goals.

  • Results-focused. The only way to get things done is by focusing on the outcome. Always keep your goal alive. Take care of the processes but have your goal in your face/ mind at all times. Keep in mind that your main outcome is owning your investment property. Every step that you take is for the advancement of that goal. And the question asked is "how is this objective advancing my ambition to earn my rental income".

  • Time-bound: Tying your goal to a time frame helps one to pace themselves in achieving it. A lot of us are procrastinators. A time-bound goal will keep one moving.


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