This year has been great for me personally in many different ways. I have achieved a lot in my personal and financial life. Big thanks for all of this goes to the fact that I do goal setting before the year starts.
From my personal experience – there isn’t a formula that works for everyone. You have to find a way that is personal and makes sense to you.
The moment you find an approach that works for you – this becomes way more powerful and effective as a process. The results start following soon after.
Below I will share the way I personally approach this task. I always use the time between the Xmas and New Years to reflect and celebrate the past year and the achievements I made.
I review the year that is ending and how it fits into the set of my longer term objectives. On top of that, I create new short term objectives that will fit into my longer term picture. In my personal view having both long term and short term objectives is the combination that helps me be at my best.
goal setting – start long term
I look at goal setting in a similar way to how I plan a road trip. While both are really different tasks – the approach I take to these is identical.
Any road trip start with the master plan. You need to understand where are you leaving from and where is it that you want to end up at. Let’s imagine it is a London to Edinburgh trip.
That’s the same thing I personally do with my goals, especially the financial ones. When I first looked at this task – I needed to understand my starting point, my London.
For this I opened an Excel and wrote down all my assets. This included things like property, savings and investment accounts. This also included all the liabilities I had. A great example is your home. It has a market value but very likely large proportion of that sits in the liabilities column in the shape of mortgage.
The next step was simple – I needed to find my Edinburgh. By this I mean – understanding what is it that I want to achieve in the long term. For me personally it is building large enough assets so I no longer need to work.
This is the point at which the income generated by my assets will offset my expenses. The easiest way to find this number in my personal view – understand the amount you need annually and multiply it by 25.
As an example – let’s imagine you say you need £50,000 per year in order to live comfortably and never ever have to worry about a job again. £50k times 25 gives us £1,250,000.
If you think of annual dividends – 4% is a realistic number. And as by magic – 4% of £1,250,000 is exacltly £50,000.
break it into short term
Once you have settled on your London to Edinburgh trip – the next step is deciding the route you want to drive. You also need to plan the fuel stops on the way.
In my view – this is the equivalent of the short term plan. This is where I personally plan what I want to achieve in the next 12 months. The beauty of this short term planning – I can straight away identify if this path fits into my longer term trip.
I do this for both personal and financial goals. For financial goals I include things like my career progression, my investment objectives for the year, any side hustles that I am working on.
The key that works the best for me – setting concrete objectives. These have to be measurable. They also have to have a specified time frame. This way it is the easiest for me to quickly check in on these and see if I am still on track to arrive to my destination before the year end.
An example of this could be – I want to save £5,000 for a deposit before the end of the year to buy a home. This simple sentence gives you so much clarity. You know exactly what you want to achieve. There is also a clearly set time frame for this.
I apply the same logic to personal goals and objectives. One of these for me personally was – go on a solo trip during 2022. I can proudly report – I have accomplished this goal of mine.
goal setting allows you to adjust your route
As with any road trip – the unexpected can happen at any point. Being flexible and ready to adjust quickly is important. This will allow you to reach the end destination in the quickest possible way. Let’s be honest – if you know there is a massive accident on your route, you will try to find an alternative way.
This is similar to how I approach my long term goals. Also – end of year check ins really help me here.
I am fully aware of where I am trying to get to. From financial point of view – these goals are also broken down into smaller steps. This way I can see if I am still on track to achieve my longer term goals.
If something has not gone according to the plan – you would rather know it well in advance to be able to plan the adjustments that need to be made to your route.
By doing annual check ins I can also review if all the tools I was planning to use are still relevant. An example can be – do all the side hustles still bring in the required amount of money in order to aid me to get to my end goal?
This can also be the perfect time to add either new tools to your toolbox or get rid of some of the old stuff you were doing. This might have become completely irrelevant for your newly adjusted long term goal.
types of objectives I create
This will be a very personal point to many so it is important to keep in mind that there is no right or wrong answer here.
I personally create 2 types of objectives. First of all – financial or business objectives. These will be very numbers driven. I find these both easy to create and track. This is due to the way my brain works. I can easily make numbers work.
The second type – personal objectives. These often either are linked to things I want to experience or learn. I often find these somewhat harder to create. This is not an issue as I know my strengths and weaknesses for many years now.
I always start with the master plan. Next follows the breaking it down into steps. It is always important to make sure these are easily measurable and have a set time period of when they need to be completed by.
write your goals down and review frequently
One other thing I find works really well for me – writing both my long and short term objectives down. I also make sure these are easily accessible and often in front of me during the day. This way I can keep remind myself what is really important and relevant to me.
I love the time between Xmas and New Years. There is a whole week for me to reflect on all of these things. It gives me a chance to analyse if I managed to achieve all the goals I wanted for the year and understand how I feel about these.
As a result, it becomes easy for me to create a new plan for the year to come. I always remind myself of the master plan and make sure the annual plan fits into that.
It is also fine to use this time to adjust or change your master plan. There is no harm or shame in admitting to yourself – the plan I previously had is no longer working for me. It is better to know this early on to make sure you go after the goals that makes the most difference to you personally.
Some people find it of benefit to review their plan once a month or quarterly. I would encourage you to experiment at the beginning. Try all different techniques and approaches to this. You need to find a way that feels good to you.
The moment you find an approach that really delivers the results and feels enjoyable to do – your life will change for good!
summary
Having a set of goals and objectives can really make it easier for you to understand – what is it exactly you want to achieve in life and how are you planning to go about it.
The way you create and manage these – has to work for you. That’s why there isn’t an easy answer of one particular technique that is the correct one.
Few tips that I have learned over time and that seem to work really well for me are:
- Be specific about what it is that you want to achieve
- Make sure it is measurable and there is a clear time frame to this
- Changing your short or long term plan is not an issue
- Review, recognise and reward yourself for sticking to the plan and delivering it
The most important thing – do what feels natural and right to you. The moment you realise what is the London to Edinburgh trip to you personally – planning the exact route and stops on the way becomes a lot more enjoyable and satisfying.
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