“I want to be a millionaire”
“I want to be rich”
Two common things I hear from many people.
They might be ok statements in general talking, but they make very poor goals.
Here is why:
1. They are not defined financial goals
It is good to want to strive for more and want to do the best you can. I am sure most people if given a choice would want to be a millionaire. With that said, however, it is much more important to know what it is you want to be and want to achieve than simply just saying you want a lot of money.
For example, some people may want to be free enough of obligations to travel freely. Others may want to be financially secure to provide for their family. And yet others may want to become the most famous rock star.
Saying you want to be a millionaire does not give you a clear path to anything. If the path is not clear, how can you breakdown the end goal into smaller achievable goals by month or day? It is simply a statement and is very difficult to achieve without definition.
The importance of a defined goal:
If your goal is to pay down debt, buy an RV and travel the US within five years, you have a very defined path. You can add the cost of debt, an RV, living expenses, and reserves during your travel time and quickly know how much it will cost. From there you can determine how much you need to save per month, week, and even by day to reach that goal.
Even more important you can find ways to accelerate that goal and the level of effort will be much easier to understand. For example, if over the five years you need an extra $10K saved to build an emergency fund, then break it down, $2,000 per year or $166 per month. That should be easy to achieve with small side jobs like Uber, a part-time job, or even holiday help.
When you break things down and know what you really want they become easier to build a plan that keeps you engaged and measures progress.
“I want to be rich” sets no path and gives you no measurements.
2. They are a distraction
The two statements also distract us from achieving the the things we really want. If you are consistently looking for that get rich idea you will rarely succeed and will always be chasing that instant ticket. In life that rarely happens, Facebook, Google, and almost all other large successes were built on top of hundreds of smaller goals that were met and capitalized on.
An extreme example would be the lottery. If you spend all your time and extra income researching how to pick numbers, creating office pools, and looking for the big payout you will pass on so many more important opportunities. Some of those passed opportunities may not make you rich, but maybe they allow you to work part-time instead of full time so you can travel or do your favorite hobby. Maybe they pay off your debt so you don’t need to worry about money. Maybe they open a door to running your own business. You never know.
The key to achieving goals is making them attainable. That does not mean they can’t be lofty, but at the very minimum, you have to be able to see a path on how to get there. If you can’t see a path, then try something different. Breaking them down is so important because it allows you to see progress, keeps you engaged, and teaches you how to build on achieved goals.
Take the time to evaluate your goals, are they reachable, can they be broken down to smaller pieces, are they the ones that make you happy? If they are, then build a path, break it down by day, and start your journey.