Where are you aiming?
“A goal is a dream with a deadline. ”
Now that you know where you stand. It’s time to start setting specific financial goals and chart a directed path for yourself.
The end goal is simple: to have financial control and freedom of your time.
However, this entails some specific "sub-goals" along the way, so let’s talk about clearly defining them.
When talking about full financial control and setting your financial goals, we are NOT talking about:
aiming to save up enough in order to go on vacation for a few weeks every summer only to come back and have to start saving up again.
aiming to get that promotion in order to afford a McMansion with a pool and a nice Ferrari on the side.
aiming to always be able to afford the latest technologies and fashions.
While these are great perks to have, these types of “lifestyle goals” will always put you in a position where money has power over you, and we want the opposite to be the case.
Achieving full financial control is all about positioning your finances in a specific way so that you can have and do what you want with your time without having to base your decisions on your next paycheck or depend on someone other than yourself to make those kinds of decisions.
Full financial control is about having enough. Enough to live a life that is not ruled by money or other financial considerations, and enough to be able to dictate your time on your own terms and conditions.
Below are what your financial goals might be at the very minimum.
FPF EXERCISE: SET THE RIGHT FINANCIAL GOALS
Write down these goals and keep them close. Know what you are aiming for at all times:
Get Out of Consumer Debt
Do you have consumer debt? Student loans? Credit card debt? Outstanding bills? Car loans? Are these payments pulling you down or propelling you upwards?
How much debt do you have to your name, if any?
Your first priority should be to eliminate your consumer debt, mortgage excluded.
Be methodical and aggressive. Not sure how? We will get to this in the following chapters.
You can get back into “good” debt only after you’ve set up the proper financial framework (Credit Chapter).
Have a Minimum Baseline Savings
Do not be financially handicapped. Your baseline savings is the amount of cash and assets available to be used as a safety net for unforeseeable events.
Do you have any savings already? Is this enough for your peace of mind?
What is the minimum amount you need at all times to maintain peace of mind?
A good baseline savings goal is 3-6 months worth of expenses and then some, depending on your current status (your health, the assets you own, the people you support, etc.).
Saving for the sake of saving is meaningless, every dollar you have should be allocated strategically, baseline savings is a savings bucket in case of emergency.
Increase Your Income IQ
Relative Income: How can you increase your hourly rate?
Diversified Income: What are other potential income sources?
Passive Income (king of all incomes): Think long term! What are some ways you can generate money passively? (Income Chapter)
Invest in Productive Assets
What do you know about investing?
Do you already have any investments?
What are the assets/investments you are interested in?
What are some viable options for you down the line? Or even now?
Do you have any assets? How are they being used?
How can you see yourself using debt strategically? Mortgage? Credit cards? (Equity Chapter) and (Investment Chapter)
What Else Do You Want?
Is there anything missing from the list above?
What are other specific financial goals you need to reach in order to be in a position of full financial control? What financial infrastructure will you need in order to live the life you want? Be specific!
Do you want to save up to start a business? Do you want to save up to go to school? Do you want to save up to give to a cause/belief that is important to you? (Expenses Chapter)
An important note about financial goals is that, just like anything else in life, they will inevitably change over time, it is important to be cognizant of this fact and adjust your finances as your goals change.
So hold on to this list. Refer back to it regularly. And know that it is a work in progress,. Remember to stay focused on your goals!