Reflecting on and setting goals for your finances

Last week’s post looked at how often you should review your investment portfolio to ensure it’s still
performing, and to make timely changes if it’s not. But it’s not only your portfolio that should be
tracked and tweaked. Your finances, after all, are just a component of how you want your whole life
to look in the future.

The idea of setting goals for the long term can be confronting – change is hard and can feel
overwhelming – but like tracking your portfolio, it can be broken down into more manageable and
effective segments.

To begin, you need a broader view of your finances, lifestyle and life goals. Where do you want to be
in five or ten years’ time, in terms of your career and finances, health and relationships? Where do
your talents and interests lie and how do they fit in to this ‘perfect vision’ of what you hope your life
to be? What life experiences and material possessions do you hope to have in the long term? Do you
have hobbies or charitable works as part of this plan?

The key thing to remember is that goal-setting is not an action plan. It’s a thought exercise, and it
can be as ambitious as you like.

A goal becomes an action plan in much smaller steps, just as a journey towards a distant light
happens one step at a time. You need to keep your eye on the light to ensure your path is true, but
actions towards reaching it remain in the immediate ground under your feet.
So goal-setting is about three things:

1. It is a thought exercise aimed at clarifying your thinking about what you want your future to
look like.

2. Be long-sighted, bold and ambitious in how you imagine your future life.

3. Include everything, from career to family to your hobbies, in this vision.

The next part of the exercise is to plan your path to this future in increments. Twelve months ahead is a helpful timeframe. You can see where you are already headed in a year’s time. Then you can compare where you’re heading to whether that position takes you closer to that more distant goal, or leads away from it.

Once you know the disparity between where you’re headed if you don’t change, versus where you’d
like to head, you can consider actions that will alter your course.

If you need to take action to change your course, then it’s time to make a 90-day action plan and
plot out new investments and activities, or decide what current behaviours and actions should be
throttled back or abandoned.

Essays on sites like Forbes and Asian Efficiency have reflected on how setting 90 days goals can be
hugely effective. Change is hard, but 90 days is enough time to take quick, short-term, achievable
action on which the future is built.