"You got to have a dream," says Bloody Mary, in Rodgers and Hammerstein's South Pacific. "If you don't have a dream," she continues, "how you gonna have a dream come true?" Replace the word dream with the word goal and this advice becomes even more valuable, especially if the discussion is about your financial future. Wishin' and hopin' just don't get the job done. You need a goal and just as important a plan for reaching it.
Your goal is as distinctive as you are. Thus, I can't tell you what your goal should be, but the general purpose of financial goals is universal: making sure you can retire without sacrificing too much of the lifestyle to which you have become accustomed. The suggestions presented here are only examples, to help you design a goal that best suits you.
TURNING DREAMS INTO GOALSWhat a goal is not: Planning on winning the lottery. A pie-in-the-sky delusion such as "someday I'm gonna be rich and/or famous" is not a goal, it's a fantasy. While that kind of delusion or fantasy may be better than no goal at all, it most likely is not going to get you where you want to be. It may be better than drifting along without any thought for the future, but a goal it is not.
What a goal is: A specific outcome arrived at via a specific path. Here's an example of a goal: "Thirty years from today I'm going to live in a brick, three-bedroom home on five acres overlooking Mud Lake. I'm going to have a nice, fuel-efficient, four-door car between four and 10 years old, a 25-foot sailboat, and a retirement savings account of $750,000. I am going to achieve this by getting an education and a job in the (fill in the blank) field and then paying myself in the form of my savings account the first 10% of everything I earn." Now that is a goal. Further, it is an achievable goal.
Now, write it down! Laminate it. Carry it with you. Make another copy, or better yet two copies, and frame them both. Put one copy on your nightstand or on the wall so it's the first thing you see when you wake up and the last thing you see before you go to sleep. Put the other framed copy on your desk at work or in some other clearly visible place.
It's uncanny how your life will develop to make that goal come true. The constant presence of that visible goal will eventually imprint itself on you. Magic happens once your subconscious gets a firm hold of your goal. Unbelievable magic. Make it real for your subconscious and your subconscious will make it real for you.
FOCUS! FOCUS!The more specific the goal, the better the chance of reaching it. Describe the house you intend to have in so much detail that it becomes an exact picture in your mind. What color is the window trim? Make sure you know. Same thing with the boat. What size is the sail? What is the make, the model, and the kind of upholstery in the car? Just to make sure that you know what your goal is for your savings account, give it a name, something like "That Place on the Lake" or "No More Alarm Clocks" a name that not only inspires you to contribute to it on a regular basis, but gives you incentive to throw in half of that bonus, too.
As your life changes, that picture of your goal may change as well. If the picture changes from a brick house to a log home, fine. If the car changes from a four-door sedan to a two-door sports car, fine. If the boat changes from a sailboat to a bass boat, fine. Just make sure you know the brand of boat, the horsepower of both the main drive and the kicker you'll use for trolling, and the placement of the steering wheel and the bait well. Go for details.
When it comes to your savings account, know what you want to invest in and what percentage will be in stocks, bonds, real estate, or whatever rings your bell. Make it so clear in your mind that you can look at that $20 pizza and see it instead as a $200 balance in your savings account, or $2,000 worth of stock, or as much as $22,000 toward an around-the-world trip, depending on how far from retirement you invested in your future instead of your tummy (see Figure 1).
You can arrive at those dollar amounts by using an individual retirement account (Ira) with a long-term annual return of 10%, a strategy that I have advocated from the beginning. If you are a registered user at Working-Money.com, go online and examine the premise in detail in "The Money Tree Grows Slowly At First," which appeared in the March 2001 issue.
LIFE DESTINATIONLook at your goal as a life destination. Look at your life as a ship full of potential. Make sure you know where all of that potential is headed, and the route you need to take to get there. Can you imagine the chaos that would result if all the ships in the world left all those far-flung ports, with all their varied and precious cargoes, without any idea where in the world they were headed? It would be disastrous, wouldn't it?
While you are thinking along those lines, think about the advantage you would have if you knew where your ship was going, how you would get there, and when you would dock. That same powerful advantage is bestowed to those who set goals in life. Be one of those with a goal and a plan on how to reach it. What a party you'll have when you arrive at those golden years! And you will.
Bruce Faber can be reached at BFaber@Traders.com.
RELATED READINGFaber, Bruce R. . "The Money Tree Grows Slowly At First,"
_____ , . "Long-Term Returns: What's Realistic & What's Not?" Working Money, Volume 2: June.
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