This is the second of a fourteen-part series that explores the core tenets of Get Rich Slowly.

Yesterday I completed my first marathon. It didn’t happen exactly as I’d planned, but it happened. Instead of running 26.2 miles, I walked the entire course. Some might view this as a failure. Not me. I’m ecstatic to have finally, at the age of forty, met one of my life-long goals.

Though I had hoped to run the marathon, training injuries the past two years thwarted me. Instead, I walked the Portland Marathon in six hours and 54 minutes. Chris Guillebeau from The Art of Non-Conformity walked the first nine miles with me, and Mac from Get Fit Slowly joined me for the final 8.2 miles. Though it didn’t happen the way I intended, I accomplished my goal.

What does my marathon experience have to do with personal finance? Everything. The journey to financial success is not a sprint — you are not going to get rich quickly — but a marathon. It doesn’t matter how swiftly you pay off your debt or save for retirement. The important thing is to actually make the effort. If you don’t start, you can never finish. To know where you’re going, you need to set goals.

Goals are the building blocks of success
I used to be lukewarm about goals. I’d set them, but could never seem to meet them. They seemed so far away, so difficult to reach. Or a few months would pass and the goals that had once seemed so appealing no longer really mattered to me. So I stopped setting goals. I lived life without intention.

As a result, I came to view myself as a failure. I had always wanted to be a writer, but I rarely wrote. I wanted to retire early, but instead I was deep in debt. I wanted to be fit, but I was only growing fatter every year. Without goals, I wandered aimlessly through life.

Over the past few years, however, I’ve come to understand that goals are the building blocks of success. Goals provide direction. They help you steer your life toward the things that matter most.

Since starting Get Rich Slowly, I’ve set a variety of financial goals. In nearly every case, I’ve met or exceeded my own expectations — often by a long way. For example:

  • I set a goal to pay off my non-mortgage debt within five years. I eliminated all $35,000 in debt in just 39 months.
  • I set a goal to build a $10,000 emergency fund in one year. Instead, I saved nearly $20,000.
  • I set a goal to make $1000 a month from my website. Instead, I made enough that I could quit my day job and blog full time.
  • I set a goal to fully-fund my Roth IRA every year. I’ve also been able to set up and fund (to various degrees) a self-employed 401(k).

Setting these goals was not enough. I had to work at them. Sometimes the work was hard. But without having set the goals in the first place, I would never have been able to achieve them. I would still be wandering blindly in the financial desert. I would still be working at the box factory, deep in debt, spending my entire salary, and wondering when things would get better.

Review: Since I’m researching this subject right now for my book, let’s review what makes a good goal. A good goal is a SMART goal. That is, a smart goal is Specific (the goal is not nebulous, but indicates precisely what you intend to do), Measurable (the goal is quantifiable instead of vague), Achievable (the goal makes you stretch, but is not impossible to reach), Relevant (the goal is meaningful to you and your situation), and Timed (the goal has a specific time by which you intend to complete it).

The power of intention
In 1951, William Hutchinson Murray wrote the following about setting and pursuing goals:

Until one is committed, there is hesitancy, the chance to draw back. Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then Providence moves too.

All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamed would have come his way.

I learned a deep respect for one of Goethe’s couplets: “Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it!”

From my experience, this is absolutely true. I am no fan of the “law of attraction”, yet I do believe that when you commit your entire self to the pursuit of a goal, you begin to notice unexpected chances and opportunities.

The road to wealth is paved with goals
Setting financial goals is no different than setting other goals. It’s important to take all goal-setting seriously, to put some thought into the process. Here are some techniques — some of which I’ve shared before — for setting smart financial goals:

  • Determine what is important to you. Money doesn’t bring happiness; pursuing goals and experiences that are aligned with our personal values brings happiness. How can you be sure your spending is aligned with your personal values? By setting goals. I’ve had great success using George Kinder’s three questions to crystalize what is important to me. This, in turn, helps me set meaningful goals.
  • Look forward, not back. Base your goals on the future, on what you want to accomplish, not on where you’ve already been. This forces you to think outside the box. Don’t worry about past failures. Concern yourself only with what you want to accomplish in the future.
  • Take one step at a time. It’s vital to break large goals into smaller ones. If you focus too much on the Big Picture, you may become intimidated and give up. You eat an elephant one bite at a time. So too with goals. Once I decided to pay off $35,000 in debt, I shifted my focus from the big number to the smaller steps along the way. I made incremental progress. If you’re pursuing a big goal, break it into small components.
  • Keep your goal in mind. One way to do this is to advertise to yourself, perhaps using the techniques described at Take Back Your Brain. Regularly remind yourself of why you’re doing the things you’re doing — but don’t obsess over the Big Picture.
  • Use an accountability partner. In June, GRS reader Kinley shared her system for meeting financial goals. She and her sister serve as accountability partners for each other. They’ve shared their current financial situation and future goals. Every month, they review their progress together. An accountability partner — whether sister, friend, or spouse — can help you keep on track.
  • Be patient. Progress toward your goal can seem slow at first, but will accelerate with time. Things will get easier. You’ll learn new techniques. You may receive support from unexpected sources. Together, these things will help to accelerate your success.
  • Don’t let setbacks derail you. It can be discouraging when your goal seems to have been thwarted. You save a $5,000 emergency fund only to have your car totaled by an uninsured driver. You start a new busines and a big-name competitor moves in down the street. You get your debt snowball rolling and your credit card company changes your terms. When setbacks happen, don’t give up. And if you make mistakes, just get back on the right track. Persevere.

For more specific advice on pursuing long-term, medium-term, sort-term, and immediate goals, check out this three-year-old post about making a wish-list of financial goals.

Tip: I’ve recently become a fan of a specific technique for tracking short-term goals I learned from GRS-reader Erica. She keeps a list of daily goals in a spiral-bound notebook. I’ve modified her system for my own use. Every day I make a list of the things I want to do. As I complete a task, I cross it off the list. When I think of something new that needs doing, I add it to the list. At the end of the day, I copy all of the uncompleted tasks to a new page, listing them in order of priority. This simple system has revolutionized my productivity.

Goals made simple
I think maybe Chris Guillebeau said it best while we were walking the marathon yesterday. We were at the three mile mark when he remarked:

You should define your goals and align your spending around them. If you get clear about what you value — what you value, not anyone else — you’ll accomplish more and live a happier life.

I liked this so much that I stopped to write it down. (Yes, I carried pen and paper with me while walking the marathon. So sue me. I’m a writer.) Goals are important; they’re the gateway to financial success.

This is the second of a fourteen-part series that explores my financial philosophy. Other parts include:

Look for a new installment in this series every Monday through the end of the year.

This article is about Basics, Planning