Why Setting Goals Increases Your Bank Balance

Flip

387 Shares

Why Setting Goals Increases Your Bank Balance.

Did you start this year with clear goals written in your notepad?

And have you seen a change in your life? Or even an increase in your bank balance?

There is a link between the goals you set and the chances of you achieving them.

Those chances are improved by the type of person you are or becoming.

Setting goals is important for achieving your desired life outcomes.

However, setting goals is not all there is as it is just a step on the path to achievement.

I’ve previously written that winning is your ability to achieve well-crafted goals that you’ve set yourself in relation to your life journey.

It’s not just the goals you set that increase your bank balance. It’s the many steps you take afterwards.

I’ve met 3 types of people on my money journey so far.

Type 1 – The Self-sabotager

This is the person who never actually gets to set a goal.

Their problem is not that they cannot pick up a notepad and write their goals.

It’s a lot deeper than that.

The problem here is usually that this person does not know who they are and what their possibilities and capabilities are.

That’s because their entire focus is on one or two past events that continue to rob them of a potentially successful future life.

Many people fit this profile and some of them will be your friends.

If they muster the courage to tell you about their holdbacks, then there is likely hope.

Type 2 – The Can-doer

Having a can-do attitude is a good thing.

However, in relation to setting goals, I’m referring to the person who gets excited about it and actually takes the steps to do it.

They set S.M.A.R.T goals and colour them neatly into their notepad.

This person even shares some of their goals with friends and might make some noise about them on Social media.

They even go as far as believing they can do it!

Believe me, the belief part is a HUGE leap forward.

But then, that’s where it ends.

The goals remain as colourful dreams in a notepad and come to the end of the year, this person wonders where the year has gone.

They take out a fresh notepad, tell themselves it’s a new beginning, and start colouring new goals into the pages.

Although this person is much closer to the reality of achieving their goals compared to the Self-sabotager, they remain in dreamland.

Type 3 – The Practical Thinker

This person was possibly a type 1 or 2, but they’ve moved on having understood a few things.

Looking at things vertically, they need:

1. Strategy

This is more important than the actual goal and describes the high-level approach of how you’ll achieve your goal.

Read on for an example below.

2. Tactics

This is where the practical thinker gets his or her name.

They think of the practical days to day steps they need to take in order to achieve their goal.

This becomes their obsession as they understand that winning happens in the day-to-day.

They take action and experiment, being conscious of the impact that their habits have on the chances of achieving their goal.

Looking at things horizontally, this person realises that achieving their goals requires resources such:

Money
Time
People

More importantly, it requires an important trade-off of resources.

He or she has to give up something in order to achieve something else.

For example, to make more money, they have to give up time and focus it on the 20% of activities that will give them 80% of the results.

Which of Type 1, 2 or 3 are you?

If you’re honest with yourself, then you’ll have the right attitude to move to the next stage of the journey.

Fear is a big part of what holds many people back.

Many don’t admit to the fear they face and therefore remain paralysed to move forward.

I’ve personally been all of Type 1, 2 and 3 on my personal development journey.

I remained type 2 for a number of years until I listened to a guy on a podcast who explained very clearly this idea of executing a trade-off in order to achieve a goal.

It immediately dawned on me why I never quite achieved some of my goals even though I was as enthusiastic as one can be.

I needed to take things a step further and see setting goals as a living process that evolves daily.

This gradually led me to become a type 3, with a greater focus of taking practical steps daily.

Let me give you a practical real-life example of what I mean:

A number of years ago, I analysed my networth and realised that I had assets that were low in liquidity.

As such, I needed to add more liquidity to my balance sheet without selling any existing assets.

Basically, I needed more near-cash assets. So here is the framework I used to achieve my goal:

If you’ve been reading a while, you’ll recall I talk about the P.O.S.T acronym:

Purpose:

Optimise for Freedom by achieving Financial Independence

And also diversify my assets some more.

Objectives

i.e. setting goals –

Build up an additional pot of £100k in near cash assets within 3 years.

Strategy:

Personal Development and Positioning money.

Tactics:

Use existing money better

A thorough review of essential vs non-essential spends and turned off certain costs.

Reviewed existing assets and structured them better to free up more cash flow.

Increased Savings Rate from around 33% to 45%.

Make new money

Started a new side hustle with the aim of generating at least £1k a month (over £12k a year).

Consulted using existing skills – another £12k a year for very little time given up.

Used freed up money and new money to invest in different asset classes and markets through Index Funds and ETFs to make more money whilst still being diversified.

Remember that money works harder than labour does over time.

I also put some of it into financing my side hustle.

Then I also focused on increasing my knowledge with things I could also teach others.

Niche skills I could use in different ways over time. E.g. Marketing, sales and negotiation skills.

I applied it and negotiated a quarter of my target as a guaranteed bonus with my employer at the time.

Can you see how that came together?

Not particularly special but unique for my circumstances.

I achieved my goal eventually, but I did it facing the challenge, being practical and taking steps daily.

Other practical things I can share, which can help you move forward include:

Go for walks daily and commit your thinking time to your goals.
Keep asking yourself – “So, what next?”
Write your goals down in a visible place that isn’t your phone.
Talk about your goals daily either with someone you trust or to yourself.
Get practical and explore the real resources you need to give up over time. Do the maths where necessary.
Have the attitude of experimenting always to see what will happen and then refine.
Don’t seek permission (directly or indirectly) from others to try things out. Just do it and see what happens.

Whilst some of these are quite straightforward, others are not.

For example, waking up at 4.30am on most days to work on a product you’re passionate about having identified an available market for it.

Doing so might require a big change in habits, something some people might consider a step too far.

This is why in life, you’ll always have those who achieve things whilst others don’t even though everyone gets the same 24 hours allotted to them every day.

Some people are prepared to push themselves outside of their comfort zones and if they do it long enough, it becomes their new norm.

To conclude,

Setting goals is a necessary first step in achieving your money goals.

You could even argue that half the battle is won by setting goals as most people just don’t bother.

However, in order to achieve that goal, your obsession needs to be channeled towards the steps you take each day to get you closer to your goal.

Make each day an active experiment and before long, you’ll develop the right attitudes and habits necessary to take action towards your goals.

Related resources:

How has setting goals improved your life? What have you done differently to improve your chances of goals success?

Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.