It is that time of the year. To me, December means finishing out the year strong, racing towards the finish line, and setting the table for a successful year going forward. For the last few weeks, I have been thinking long and hard about my life, investing, and our blog goals. What should I focus on? Where should I be at this point next year? Questions like these have racing through my mind and I am trying to process and make sense of them all. I’ve been thinking a lot about the goals I have set from the prior year and trying to leverage them as much as possible, including both the successes and the shortcomings. I thought it would be helpful for me, and hopefully some of you, to write down my thoughts and lessons learned over the last few years about setting goals. Time to dive in.
Before I set in, I thought I should mention this to all of you that are new to the “setting goals” process. This is an acquired task for me and my first ever formal goal listing was in 2014. Of course, you guessed it, it had coincided with the founding of our website. That’s when I saw the light. I found the goal setting process was extremely helpful in the beginning stages of my portfolio, forcing me to focus , buckle down, and push my portfolio/dividend income higher and higher. I was determined to hit the mark and I had fun along the way. Aiming for a certain benchmark was way more fun than the “Well, I feel like investing now” approach I had taken earlier in my investing career that saw my dividend income grow sporadically. Once I started setting goals, my income grew steadily…exactly how I like it. Now, setting goals is second nature to me and a process that I look forward to annually.
The following lessons have been on my mind a lot recently, as I mentioned in the introduction. I’m trying to use my past experiences as much as possible to help shape the goals of the future. A goal might seem like an amazing idea at the time, only to find yourself asking questions two months later such as “Who was I kidding?” or “What on earth was I thinking?” There will be amazing goals that you set every year and there will be duds. Just like investing and the rest of life, it is going to happen. The important thing is taking the right lessons from your experiences and using those experiences as a foundation for better ideas. Here are the lessons that have learned about setting goals and this amazing process. I’m going to try to keep the clichés to a minimum here, but just a heads up, there will be several throughout the article.
Lesson #1: Focus On What You Can Control – This was the very first lesson I learned in the goal setting process. I think your goals should be focused on actions you can control. An easier way to explain this will be to discuss how this impacted me. The first time I set investing goals for myself, one of my goals was to end with a portfolio market value in excess of a certain dollar amount. I thought that I could achieve this goal by trying to invest as much as possible and watch the market take care of the rest. WRONG. I was close to hitting this mark, and you guessed it, the market started to turn south. Come November, knowing my cash balance and the funds that would be available pver the next couple of months, I had the realization that the only way I was going to cross this mark was if the market would start to appreciate… a lot. There I was, victim to the market, having the helpless feeling knowing that there was nothing I could do to change the result.
That’s what I am referring to with this lesson, and it doesn’t apply just to investing either. In order to succeed and achieve this goal, I was dependent on forces that I could not control. I hated it. When I reflected on why I was not able to cross the certain market value, I realized the flaw in the logic. The purpose of setting the goal to increase my market value was to increase the overall size of my portfolio (obviously). In an overly simplistic picture, I realized there were two ways my portfolio was going to increase: by investing more and by market appreciation. Which one of those methods did I have complete influence over? The answer is obvious. That’s why I changed my thought process when I set my goal for the next year. Rather than aiming for a certain market value, which needs a healthy dose contributions and market appreciation, I instead focused on trying to invest certain dollar amount in the market over the next twelve months. Transferring cash into your investing account is a goal that you can control and hitting that mark is completely dependent on your ability to save money to invest in the market. To me, that was a much more solid goal than the previous year and made a huge difference.
Lesson #2: Push Yourself – I think the best goals are the ones that are difficult to obtain. What’s the point of jumping over a hurdle that is barely off the ground? What’s the point of setting a goal that you know you can achieve with minimal effort? You should be pushing and sweating every step of the way. If you set a goal to invest a certain amount of capital during a year, then you should still be trying to figure out how you are going to scrape together the last few dollars to hit that goal. If your goal is run X number of miles during the year or have X number of steps, you should still be trying to hit that mark through the end of the year. You shouldn’t set the bar so low that you run enough miles by the end of June and are sipping drinks on the beach for the last six months. Push yourself, force yourself to be uncomfortable. If you want it bad enough, you will find a way to make it happen. That is just a part of human nature. Lanny and I were having a discussion about our 2017 blog goals and we stumbled on the ultimate cliché/quote that inspired us to increase our targeted income by a significant of dollars. “If you aim for the moon and miss, you’ll land among the stars.”
Lesson #3: Make Sure It Is Achievable – This is a perfect follow-up to the previous lesson. A goal should be challenging. A goal should make you push yourself. But in the end, you have to be able to achieve the goal or there has to at least be a realistic chance that you can accomplish the goal. If you set too ambitious of a goal, what’s going to happen when you realize after one month that there is no way you are going to achieve it? To piggy back off of the last example, of course Lanny and I would love for our website to earn $10,000,000 next year. Could that be a goal of ours? Sure. Would it be effective? No, considering we would learn after one day that the likelihood of that occurring next year. But that didn’t stop us from pursuing a super aggressive income total that we know we can achieve with enough hard work and dedication (No, I won’t spoil that amount for you in this article – sorry folks). You need to push yourself, you need to aim high. But you need to make sure that you can get there.
I’ve given you examples so far of goals that involve a lot of numbers, so I wanted to apply this to one of my life goals from 2016. When I set my goals, I entered the process thinking that I wanted to begin the process of re-teaching myself how to play piano. Through high school, I practiced daily and was pretty good by the time I graduated. Then, well, life happened. I stopped practicing as frequently and my skills fell off a cliff. I miss it tremendously, which is why I decided to set a goal that involved playing piano. When I set the goal though, I wasn’t honest with myself. I had the image in my mind of me playing at my peak level, not my current state. My goal wasn’t simply to re-learn how to play. My goal was to teach myself a song that I could barely play back in my prime. If I couldn’t master this song when I practiced an hour or two every day after playing for ten consecutive years, why on earth would I be able to learn this song when working full-time, blogging, and trying to live the normal adult life? OF COURSE I FAILED. I didn’t set myself up for success because I wasn’t honest with myself and set the bare astronomically high. The problem wasn’t the concept of the goal, because I really wanted to play piano and get back in the habit of playing piano. The problem was that I was aiming for something that I had no chance of achieving. I should have found a difficult, achievable goal instead of an impossible one. Let’s just say I am hopefully going to correct this when setting my goals for next year.
Lesson #4: Allow Flexibility and Don’t Box Yourself In – The title of this lesson probably sounds different from the message I am trying to get across. I’ve made mistakes in the past where I created goals that were so specific/so narrowly focused that I would have been engaging in an action just to satisfy the goal whether or not that was the correct decision at the time. Hopefully that makes sense. For example, one of my goals last year was to investing in two dividend stocks with yields below 2%. In order to achieve that goal, I would have had to purchase stocks that were overvalued and didn’t meet the normal metrics of our stock screener or were not necessarily the best deal at the time. Looking back, I should have set my goal as “invest in two stocks that are below my portfolio’s dividend yield” or something that would have provided me with more flexibility. I know this isn’t true for all goals and sometimes being specific is the right answer. But in my brief goal setting history, I don’t think I have accomplished a goal that forces one activity. Please let me know if you have had a different experience.
Lesson #5: Have Fun – I’ll end with the simplest lesson I have learned…have fun and set goals that you are going to enjoy battling for over the course of a year. I promise you that you will be more motivated, determined, and more likely to achieve the goal if you are having fun along the way. Life is too short to force yourself into actions that are going to make you miserable. So enjoy the ride and the journey,
Hopefully you find these lessons helpful as you set your goals for the coming year and many years going forward. I know we all have different lessons, pieces of advice, or tricks of the trade we have learned over the years. So please, share your stories and lessons in the comments section so we can all learn from each other and set the best goals possible! I can’t wait to read your comments.