It’s that time of the year again! Time to create motivating goals for 2018!
Sure, you can wait until January to set some random goals. However, it’s easier if you set them up now so you can rethink and edit them during the next weeks and start 2018 with everything set in place. You can also start working towards them right away if you have already achieved all of 2017.
A good goal is challenging, motivating and enables you to improve parts of your life that are important to you. With a good ‘bucket list’ you will be more productive and in a year from now, you will see that you’ve made an incredible progress to become a better human being and maybe the best version of yourself.
Maybe you think right now, it’s pretty easy to set up goals and you’ve made goals for years but the realization is your main concern. But that’s not the always the case.
The goal ‘I want to have the perfect body’ or ‘I want to make some money’ is far from being helpful. They have a lack of concreteness.
But before we dive into the micro level of goal setting, let’s talk about the bigger picture.
The macro level of effective goal setting
The biggest struggle I have with goal setting is not that I don’t formulate them correctly. It’s also not a problem with the goals in general. It’s something that has to do with the way I am.
I simply have too many stuff I want to be good at.
I am pretty sure that I am not the only one. We all have several hobbies and things that we love to do. Some of you guys may enjoy watching TV. You’re maybe also interested in fitness and finance. You would like to spend more time with your loved ones and read more books. These are just some very common examples.
Let me give you a quick overview of my bucket list from 2017 (and why I failed to achieve most of them). I had:
- 7 goals for improving my day job (Realized: 3/7).
- 3 to stay on top in college (Realized: 1/3).
- 4 points for getting started with our own apartment (Realized: 2/4).
- 3 goals for learning Croatian/Serbian (Realized: 0/3).
- 6 objects for financial success (Realized: 6/6 not all are done yet but I will be able to do all of them).
- 5 steps to becoming more knowledgeable (Realized: 2/5).
- 4 things I wanted to do to be a better partner to my girlfriend (Realized: 2/4).
These are 32 goals that I wanted to achieve in one year! I have already removed the category fitness out of my list during this year but I assume at the beginning I had 40 list points. I was able to achieve 50% of the cut list.
It’s pretty clear why I’ve failed to accomplish most of them. Do you know how hard it is to improve in 7 distinct parts of your life? Try to create a good schedule for this and you will see why you feel like you don’t have time for any of those!
But what’s the solution to this problem?
Find out what’s important to you
It’s as simple as that. List all of the areas of your life that are important to you and you want to continue to do (or start doing). And then arrange them in descending order. A tool like Excel or Google Sheets helps a lot. However, you can also use pen and paper and simply give each of the list items a number. Potentially you can add order numbers (e.g. starting with 1 for the most important and increasing by 1 for the second item) or add points to them (e.g. 10 is the most important). Let me suggest to use an ordering system because then you can extend the list if you add another item to it.
Below you can see an example of stuff that is important to me.
Now you have a good overview where to start. You will see that some of the goals are more time demanding than others. You want to concentrate on just a few main goals and maybe add some of the minor ones if you have some time left. But before you start this, let me give you another portion of goal theory.
The relationship of goals
Actually, there are 3 types of goals and it’s critical to understand them.
These are two goals that have nothing to do with each other or the correlation is at least pretty low. If you want to have 12% returns on your investments next year and also have a six-pack in August it’s no problem to handle that. Sure, you may devote a lot of time to both of these topics to achieve them. Anyway, they don’t interfere with each other. You workout in the morning, eat clean and in the evening read some investing books and make some lucky picks. If you have only independent goals on your list you just have to care not to do too many and you should be fine.
Here it gets more interesting. Both of your objectives have a positive impact on each other. For example, I want to become be fully booked as a freelancer next year and also increase my monthly contributions to my investments. Because I work that much and get paid at an hourly rate, I will receive more money. The money can then be used for my investments. An example out of financing would be if you want to eat more healthy and decrease your body fat. You can use this beneficial effect to achieve more of your goals at the same time. If you have may beneficial items on your list you can probably pick more than the average (with only independent goals).
This is the last type and the one that is met mostly. All of your hobbies take some of your time and by that, they are conflicting with each other. You can combine listing to podcasts and go to the gym. Anyway, if you want to become fluent in a new language, have the perfect body shape, work 60 hours per week, read 1000 books and sleep 15 hours a day in the same year, you will find yourself in a difficult situation. If you have a lot of time-consuming and conflicting goals on your list, you should try to avoid adding too many of those to your 2018 plan.
Pick the areas you want to concentrate on
Now that you know, what’s important to you and can judge how these areas will affect each other, you can start picking items from your list starting from the top. You may skip one item because it will interfere with another that is already on your bucket list and add a less important one because it’s not so time demanding or can be combined with others. Learning a new language and traveling is the perfect example. Spend less on going out and investing more is a great example from a financial perspective.
As soon as you think you have enough areas to focus on we can start to create some actual goals to improve.
Note: Remember that you still need time to do things you really like. Watching TV, listening to music, hanging out with your friends. Better be conservative here and add items later in that year than failing on all of them.
The micro level of effective goal setting (the SMART formula)
Remember those two goals from the beginning? ‘I want to have the perfect body’ and ‘I want to make some money’. They will not work because you will never know when you achieved them. What is the perfect body? What is some money? When do you want to achieve those goals? In August, December or February?
There is a great formula that helps you to craft the perfect, engaging and motivating goal for yourself:
It’s simply called SMART. It’s an acronym for:
- Specific (simple, sensible, significant).
- Measurable (meaningful, motivating).
- Achievable (agreed, attainable).
- Relevant (reasonable, realistic and resourced, results-based).
- Time-bound (time-based, time-limited, time/cost limited, timely, time-sensitive).
You can find more information on that formula here.
So let’s improve our goals accordingly.
To make our goals more specific we want to make clear what we want to have, why and where. You can add other w-questions except when.
The hypothetical goals turn into:
- I want to have the perfect body because I want to get more comfortable with myself so I finally find the confidence to ask the girl of my heart for a date.
- I want to make more money on my day job than I did last year so I can increase my investments.
You can argue they are not simpler. But actually you can tell right away why you want to have those goals and it seems more appealing to me.
Next, we want to make them measurable. This is important because otherwise, we won’t know if we have achieved them already.
The hypothetical goals turn into:
- I want to cut my body fat to 7% because I want to get more comfortable with myself so I finally find the confidence to ask the girl of my heart for a date.
- I want to earn $60,000 on my day job so I can increase my investments.
This feels much better. You have a number that you can stick to and you know exactly when you’ve achieved the goal.
A goal must be achievable otherwise you have never a chance to succeed. If the goal is unrealistic already on the 1st January you will be demotivated and will not even get close to it.
The hypothetical goals turn into:
This depends heavily on the situation you are in right now. If we assume the guy from example one has a body fat percentage of 45 he will probably not be able to achieve the goal. So right now, we won’t change the goals here. You have to evaluate this on your own.
Every goal should be relevant at the moment you want to achieve it. If you don’t have a job the goal to make $100,000 on a day job is maybe still achievable if you are a professional. However, it’s more important to find a job in the first place. A goal can also be irrelevant if it doesn’t get you any further in the bigger picture. If you never want to have a girlfriend that cares about your body shape, the goal number one is probably not the one you should follow. Build your confidence in a different way.
The hypothetical goals turn into:
Again no change here. This depends on your current situation and on your goals. I already have found the girl of my life and the goal number one wouldn’t be relevant to me. However, I could change this to something like ‘I want to cut my body fat to 10% because I want to impress my girlfriend and show her that I will never be a couch potato and take her for granted’. Anyway, we will keep them as they are.
How much time do you have to complete the tasks? Have you ever heard that a task always takes as long as time is assigned to it? When you have 3 months to complete a report for the college you will need exactly those 3 months. If your professor tells you, that you need to hand in the report tomorrow you will find a way to make it happen. That’s the reason why you want to give each of your goals a deadline.
The hypothetical goals turn into:
- I want to cut my body fat to 7% in August 2018 because I want to get more comfortable with myself so I finally find the confidence to ask the girl of my heart for a date when we met each other during the summer break.
- I want to earn $60,000 in the whole year 2018 on my day job so I can increase my investments.
You see, they don’t have to be finished during the year. It’s fine to set the goal for the whole year. Though, you want to avoid that you need to finish all of your goals in the last 2 weeks of December when Christmas and the New Year are coming. So try to find the perfect mixture.
I don’t know how you feel about it, but I think these goals are much more concrete and easier to follow than the ones before.
Examples of good financial goals
Okay, after the theory of goal setting let’s come back to our finances. What are good goals for 2018 you can follow?
I like to split this a little more by creating a long-term goal in the far future and short-term goals for the single year. A long-term goal can be paying off all debt by 2019 to be able to work for early retirement by then. It’s important to have a long-term vision that you won’t create goals for the sake itself. You want to create them so you will accomplish something big in the far future. Some life goal or so.
I like the following quote:
You have to begin with the end in mind
Here is a list of good financial goals:
- We want to pay off $21k of our debt in 2018 to get closer to our debt-free life in 2020 which would make us happy.
- I want to build an emergency fund of $3,000 until 31st July, so I can cover the expenses of 4 months without taking a loan if I lose my job. This will increase my security and I will feel more comfortable.
- My goal is to get 3 freelancing projects of at least 2 months duration in 2018 so I can start working less on my day job that makes me sick.
- I want to donate $300 to the local pet shop in November 2018 so they can continue their great job and I can make the world a better place!
- I will buy a car in June 2018 for less than 10k with less than 90k miles, so I can drive to work and save some time on the commute.
How to achieve your goals in 2018 (practical tips)
Goal setting is a big part. With a good plan half of the job is already done. However, if you are still struggling to achieve the goals of 2018, try the following:
1. Write the goals down
Write down a list of the goals. Visualisation helps a lot. Try to print the list or if you prefer them in a digital way make sure you see the goals from time to time.
2. Create an action plan
You can break things down even more. Making an actionable plan will help you to reach your goals step by step. You just have to take a look at the list and know what’s coming next. You should also add deadlines for those subgoals.
This will also decrease the risk of forgetting to start working towards your goals.
3. Use software
There are great tools out there. I love Evernote for all of my lists. You can download it for all your devices. Notes get synced and you can even invite others to work together on one note. This is great if you’re in a relationship and you have created your goals together.
Wunderlist is another tool that is great for this task. It’s probably even better than Evernote as it is a to-do application. It’s also available for several operating systems and free to use with a premium option. Wunderlist displays your goals in the right order and with a simple click on the check mark, you will complete the task.
The software helps you to keep track and have your goals right in your pocket and with you all the time. However, be careful here! You can change things on a computer more easily and depending on your willpower you may change the goals to something more easier if you see that you will not reach them. Be honest with yourself and if it doesn’t work, switch back to pen and paper.
4. Set reminders
This can be done with pen and paper but is even better if you use one of the tools I’ve mentioned. Both of them let you add a reminder that can be set to a specific time. With the handwritten solution, you can still use your smartphone calendar application. I would suggest setting a reminder for every subgoal or if you haven’t created an action plan to look at the list at least once a month. Otherwise, you risk to forget it or at least fail to complete the tasks in time.
5. Fight against the temptation to change it during the year
Okay, maybe you’ve failed on the first try. But you will only learn from your mistakes if you accept them as those. If you say things like ‘okay, that wasn’t planned so I had no chance to achieve it anyway’ or ‘I simply delete it’ you will never be able to reach your full potential. Every failure is just a step towards greatness. Let mistakes happen and learn from them. Don’t adjust the bucket list during the year.
My financial goals for 2018
In 2017, I did great on financial goals. The rest wasn’t that well at all. Even financially, I could have been better. It was a pretty sloppy end of the year. I failed on small things in November and spoiler alert, I will fail to stick to my budget in December. I guess a big reason for this is, that I’ve set too easy goals this year.
In 2018, there is a big question mark. I will stop working as a student and start freelancing in February. I think I will be able to work for 9 months (1 month off as a student and 2 for vacations and maybe I will be ill one or two weeks). But if a project doesn’t fill the final month I have some days off where I won’t receive money. So I calculate to receive something between 50k and 70k EUR. With that said, I’ve formed the following goals:
My long-term goals are
- My goal is to earn 100 EUR/hour in July 2020. This will help me to achieve my other financial goals and work less.
- I want to build 4 income streams to be diversified and limit the risk of a job loss or having no project for several months/years. The income streams are freelancing (Feburary 2018), dividend stocks (December 2017), rental properties (December 2025) and my blog (October 2020).
- I want to be a millionaire in December 2030. I want to prove myself that I am able to achieve anything I desire and even after I’ve started with no inheritance or similar, I was able to become a millionaire at the age of 40.
My goals for this year are
- I want to get paid 70 EUR/hour (or above) in at least one project in 2018. This will help me to accelerate my investments because I’m already 27, I have to catch up to achieve my financial long-term goals.
- I want to build a net worth of 30k EUR until December 2018. This will a step towards my long-term goal to be a millionaire.
- My depot should consist of stocks in December 2018 that will generate an average of 20 EUR/month in dividend payments before taxes. This will contribute to my investments as I am planning to reinvest the dividends.
- The emergency fund I’ve built over the last years should be increased in 2018 to 6,000 EUR so I have less risk to get broke when I don’t find a project.
- My wedding savings account should be 2,300 EUR in December 2018. This will help me when Mrs. Budget and I wish to marry.
- I want to donate 300 EUR in October 2018 to 3 different institutions because I would like to give something back to people and animals who are not that blessed than I am.
- In May 2018, I want to own my very first car. This will help me to get projects that are in a bigger area around my city and ensure that I have enough projects to reach my financial goals.
As you can see, most of the goals are finished at the end of the year. When it comes to finances this is often the case as you have multiple things you can do and mostly you create them for the whole year and don’t finish a savings account or investments earlier in the year. I have again a lot of goals but this is fine as I have finished all of my the ones in 2017 successfully.
Uff, lengthy post. Now it’s your turn. Tell me what are your (financial) goals for 2018? Leave a comment below or find me on Twitter!