Goals are the gateway to financial success

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.

More about...Planning

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Brent Riggs
Brent Riggs
10 years ago

Goals, and to be FOCUSED on those goals. I know many who make great efforts to create goals, but then do not put the appropriate LASER focus into play needed to achieve them. I answer questions and frequently teach these three: goals, focus, discipline.

You are 100% correct, it is a marathon, not a sprint. Too many people want success NOW, and don’t realize that it is long term mindset and process.

Brent Riggs
http://www.buildabetterlife.com

Britt
Britt
10 years ago

Just a heads up JD, check out your third paragraph, “The journey to financial success is not a sprint – you are not going to get rich slowly – but a marathon” …correct me if i’m wrong, but didn’t you mean to say, “…get rich quick(ly)…”? Just trying to help a brother out :).

Lydia
Lydia
10 years ago

Great job, JD! You have inspired me this morning.

Joe
Joe
10 years ago

Congratulations on the marathon! I ran a 10k yesterday in training for a marathon early next year and know how tought it can be (and I’m only 26).

Jennifer
Jennifer
10 years ago

Congrats on meeting your goal!

In this day of instant gratification, it is hard to step back and view progress in the long term. It is like when the pediatricians tell you to ignore what your child eats at each meal, but pay attention to what they eat over the course of the week to determine if they are getting adequate nutrition. We should step back and see how we have done over the past year, not just the past month.

Cara
Cara
10 years ago

CONGRATULATIONS on your marathon! I think the most important lesson from the marathon is that even if things don’t go exactly as planned toward your goal, you KEEP GOING. Sometimes we get so caught up in wanting the process to be “just so” that we forget the bigger picture. You didn’t. Way to go!!

Beth@Smart Family Tips
[email protected] Family Tips
10 years ago

As J.D. mentioned, I find that breaking down goals into specific steps helps tremendously. It’s easy for me to become overwhelmed with large projects or goals. When I take a moment to write out the steps, all the way down to, “what can I do TODAY to get started on this?” I’m much better off.

I’ve been surprised by what I’ve been able to accomplish just by writing things down.

This is an incredibly useful post, J.D. I found myself jotting down notes while reading it. Thank you!

Neal@Wealth Pilgrim
10 years ago

JD, congratulations on the marathon. I did one several years ago and it’s a huge accomplishment.

Of all the steps you mentioned, having an accountability partner has the most impact – at least in my experience.

There is just something magical that happens once I commit to another human being.

SF_UK
SF_UK
10 years ago

Your “take one step at a time” reminded me of a mentor I had who described this process as the “chocolate elephant”.

How would you eat a chocolate elephant?

Some people might start at the end of the trunk, some with a toenail, some with the tail. The key is that everybody can visualise eating a chocolate elephant by eating a little bit at a time. Big goals are just the same. Different people attack them in different way, but the key is to do a little at a time, and eventually you’ll reach the end.

Tyler Tervooren
Tyler Tervooren
10 years ago

I’m really glad you mentioned the importance of HOW we make our goals. We can do all of these things and take all of these steps to reach what we think is success only to find more unhappiness if we don’t spend the time in the very beginning to, like Chris said, get clear about what’s really important to us.

You can follow any plan, but it will only work if if it’s the right one!

J.D.
J.D.
10 years ago

@Britt (#2)
Oops. Thanks for pointing out that error. It’s an embarrassing one! My typing reflexes took over and I wrote the wrong phrase. Fixed now…

Ann
Ann
10 years ago

Don’t worry about past failures.

No, you shouldn’t worry about past failures, but you should learn from them and use them to motivate you.

olga
olga
10 years ago

Love it, just love this type of reminders. And yes, JD, congrats on a marathon! You may have not run it as intended, but you didn’t back away! This year I achieved a dream to get into Hardrock 100 (tough lottery). I did, but was sidelined by injuries and personal life to train properly. I walked the damn course and kissed the Rock at the finish line! And that’s what counts:)

Little House
Little House
10 years ago

Congratulations on your marathon! Thanks for this inspiring post as well. I completely agree that setting specific goals that make a person happy is the key. Also, checking up on your goals is helpful, especially if you have an accountability partner, or someone who shares that goal with you and makes sure you’re staying on track. That’s a great tip.

thanks again-
Little House

sam
sam
10 years ago

Goals are a great way to monitor success and you have been successful. I think I may have to take a note out of your book, all my current goals are fairly low key like quit the day job and work from home which is open ended and not very focused – which is my working style but probably not very constructive or set in stone.

Norman
Norman
10 years ago

Congratulations on your marathon. I would feel great if I could only walk the marathon like you. After reading your post I am going to set goal of being able to walking a marathon.
Thanks very much
Norman

April
April
10 years ago

Congratulations! And also, you MUST watch Run Fat Boy Run…it’s a British comedy about a guy who decides to run a marathon three weeks before its held to show his ex that he can finish something. Hilarious movie…I think you’d like it. Your post reminds me of one of my favorite quotes by Patañjali, who compiled the Yoga Sutras. I especially like the part about the mind transcending limitations: “When you are inspired by some great purpose, some extraordinary project, all your thoughts break their bonds: Your mind transcends limitations, your consciousness expands in every direction, and you find yourself… Read more »

Debbie M
Debbie M
10 years ago

I really like this post. I especially have to work on figuring out the smaller steps and organizing myself to do them. It really is amazing how much more I get done when I’ve actually written down these smaller goals as to-do items. (I prefer to check them off than to cross them out.) Sometimes you do have to look back because your past actions affect what you can do now. People with different pasts have different options. I agree though that you should focus your efforts on accomplishing something new rather than re-hashing or feeling bad about something old.… Read more »

Ellen / MoneyLounge
Ellen / MoneyLounge
10 years ago

This is a very inspiring post. And I like your point that sometimes you can achieve your goals in a different way than expected (as you walked the marathon you had set out to do – congrats!). I always find that my goals stick better if I write them down. Then, every once in a while, I’ll come across where I wrote them down and remember how much they mean to me. I also have the goal to run a marathon. I have been working up to it for some time now, and the most important part of my training… Read more »

Kimmo
Kimmo
10 years ago

I really liked this post! Thank you very much.

mewithoutdebt.com
mewithoutdebt.com
10 years ago

Congratulations on the completion!

I am glad that you decide to highlight “Take one step at a time.” Many of us fail because we take too many things at one time.

Kandace
Kandace
10 years ago

Congratulations on finishing the marathon and completing your goal. I’ve run 11 of them and I find that the whole process of training and completion is a great analogy for accomplishing many of life’s goals. Some marathons are easier and other’s grueling. Completion is the point of a marathon–not time–just as getting rich slowly is the point. Your goals have shown that you can do this faster if there is a direct timeline involved. Keep up the good work, and the walking. I hope you aren’t too sore today… Go for a short and slow walk. It will help your… Read more »

Rachael
Rachael
10 years ago

Hey, good job. 🙂 You are an inspiration to me. Just wanted to let you know.

CB
CB
10 years ago

Congrats JD! I ran Cross Country in HS. I remember freshman year thinking I’d never be faster than maybe 28 mins for the 3mi/5K course. Heck, I remember feeling like I’d never be able to finish a race without walking for at least some portion of it. But I also remember the first race I ran all the way through. It was an invitational on the State finals course with a huge dip that you had to run down and up twice. It was slow but I ran the whole thing! After that I started getting faster and eventually ran… Read more »

Brigid
Brigid
10 years ago

Congrats on the marathon. I seriously hope no one called you a failure for walking it. I’ve done four by doing the run/walk intervals and it’s funny how much I’ve applied that concept to other aspects of my life. I used to feel that if I didn’t run the whole time, it somehow “didn’t count”. Every little bit is something. As for goal setting – I only set action goals since those are the easiest to control. My goal is to not stop for a latte this week or drink 5 glasses of water today. Saying I’ll lose 15 pounds… Read more »

Tyler Karaszewski
Tyler Karaszewski
10 years ago

Having goals is great, but it’s not enough. You have to be to choose sensible goals. I remember a time when I *really, really* thought high-performance cylinder heads for my car were important. Or when I was in college, there were times when I was supremely focused on a new laptop computer. I realized both of these goals, neither really improved my life much, and they both dug me deeper into debt. Making a ‘to-do’ list and checking items off of it is only useful when the items on the list are useful. Simply checking things off has no real… Read more »

Craig
Craig
10 years ago

Having goals keeps you motivated. Without motivation it is very difficult to accomplish your goals or get much done. Whether finances or otherwise, having goals keeps thing competitive and fun..

Kristin
Kristin
10 years ago

Thanks for a wonderful, highly inspirational post. My financial life is on track these days (due in no small part to your writings here at GRS) but it feels like some of my other major lifetime goals (write a novel, master another language… or two!) have fallen by the wayside in the meantime. I’m going to print this article out and post it by my computer, to help remind me of how to be motivated while writing or studying.

Chickybeth
Chickybeth
10 years ago

Great job J.D.! You should be proud to have walked that far. So what if you couldn’t run? I think you are amazing and a definite inspiration. Keep it up!

Karen
Karen
10 years ago

I totally agree on having financial goals (and also fitness goals!). What works for me $ wise, is an excel spreadsheet with where I want to go for the year and progress so far. For some reason, seeing the nice number in the bank that I want/could have at the end of the year really motivates me to turn down short-term gratification and stick to my saving plan. I also like using Excel to set my budget because of the automatic calculations you can build in. For example, I deliberately “overbudgetted” for my monthly household spending—which means that every week… Read more »

Sam
Sam
10 years ago

Oh yeah, big fan of the goals. Track my savings goals at least twice a month, track my networth at least twice a month (not really a goal, but tracking it keeps me motivated). Track my personal goals probably 5-10 times a week, these are small goals (think taking the stairs at work and spending 30 minutes a day on house chores) but small goals can add up to big results. Yes, determining the goals is important, but for me the tracking is what gets me moving in the right direction. When we were paying off our non-mortgage debt I… Read more »

Crystal
Crystal
10 years ago

Congratulations!! It’s an amazing achievement whether everyone out there running marathons would agree with that statement based on your time or not. I know. I did my marathon just under six hours and felt the need to throw out disclaimers just like you are. But then I decided, no one can take this away from me. Not even those who do it in half my time. I DID THIS!!! AND SO DID YOU! CONGRATS to you!

Financial Samurai
Financial Samurai
10 years ago

Congrats JD!

Can you talk about your income goals a little more? Elimating $35,000 in debt in 39 months is a great achievement, and especially difficult if someone only makes $40-60,000 a year.

However, what if you are making $35,000 a month, or close to $500,000 a year, would the time frame of the goal be altered? Isn’t everything relative?

Thnx

Evolution of Wealth
Evolution of Wealth
10 years ago

Congratulations on completing the marathon. It is also important to write your goals down. Better yet, post them. Look at them often and know how great it will feel when you complete them. How did you first establish and pursue the goals you mentioned? I’m guessing it was a pretty big step from thinking about it in your head to making it a concrete goal. I’d also guess that writing down was a big bridge between the two.

Kevin M
Kevin M
10 years ago

@JD – now that you’re in the so-called “third stage of personal finance” are you finding it harder to define goals? I know I am – we’re out of debt except our mortgage, we contribute healthy amounts to our retirement and continue to save outside those as well. Maybe it’s just that I’m not exactly sure what I want out of life right now. Or maybe this is a good sign that I’ve reached a point of “enough”? Or maybe it’s a sign that all the low-hanging fruit goals are accomplished and now I need to move on to bigger,… Read more »

Foxie | CarsxGirl
Foxie | CarsxGirl
10 years ago

Grats on the marathon! I don’t think I could even walk that far at once… Maybe. I enjoy walking, running not so much. Perseverance is the one thing I’d like to keep near and dear, if I were to have to choose just one thing. It’s why I got the kanji for “nintai,” perseverance, on my wrist. I see it everyday, and am reminded that I get up and do the things I’m doing now to get somewhere better tomorrow. While I got it to remind me that I won’t get good at racing if I don’t keep at it,… Read more »

J.D.
J.D.
10 years ago

I haven’t done this in a while (busy busy busy!), but I’m going to take time out of the book-writing to answer a couple of questions. There are some good ones here. First, @Financial Samurai (#33), yes goals are different for different people. If you want to get debt free, your timeline is going to be influenced by the amount of debt you have and by your income. In my case, when I set my goal, my salary was near the median for men in the United States ($42,000). My efforts at cutting costs freed money from this salary that… Read more »

Kevin M
Kevin M
10 years ago

@JD – I think you said it perfectly, about how your saving/investing goals are now a reflex or habit. It feels damn good to be sending money to my Roth IRA every month instead of paying off a car note or credit card.

I guess I need to sit down and figure out where I want to be long-term and break it down into smaller, more tangible steps. This post was terrific, can’t wait to see the rest of the core tenets series.

Dustin | Engaged Marriage
Dustin | Engaged Marriage
10 years ago

I have used several of the tips and techniques you have outlined here in my previous financial journey toward debt freedom, and I have maintained this approach to our finances seamlessly.

It occurred to me while reading this great post that I need to apply this same approach to two high-priority areas in my life currently: my MARRIAGE and my WEBSITE (which is incidentally is about marriage). Goal setting, especially awesome goal setting like you have outlined here, works and can be applied in so many ways to improve our lives!

Rob Bennett
Rob Bennett
10 years ago

Goals are everything. The reason why is that it is the goal that provides the motivation to get things done. If you pursue motivating goals, you will figure out a way to get there sooner or later. If your goals do not motivate, you will piss away any advantage that comes your way. I don’t believe that people should pursue an old-age retirement as their saving goal because I believe that it is too distant to provide much motivation. I prefer to pursue goals that can be achieved within five years. Goals farther out than that just do not seem… Read more »

Financial Samurai
Financial Samurai
10 years ago

Hi JD – Thanks for your response! Maybe I can be more daring in my own questioning without fear of irking you? 🙂 I hear where you are coming from regarding when you set your goal, and your then income of $47,000 (thnx for sharing). However, your blog has clearly grown tremendously (congrats for this), so I must imagine you are making much much more than that? I have a friend who has 1,000 subscribers and makes about $1,500/month from his blog through ad revenue. With 68,000 readers on GRS, maybe you don’t make 68X more than $1,500/month or $102,000… Read more »

ami
ami
10 years ago

Outstanding job completing the marathon! You spent virtually an entire workday walking, that’s amazing. And by completing your goal – even by walking – you adhered to important values of honoring your commitment and not letting the quest for Perfect prevent you from achieving the Great.

Also liked the way you tied personal values to financial goals. As you suggest, when your goals (financial or otherwise) are tied to your deeply held beliefs, they are easier to achieve – and so much more satisfying when complete!

Congratulations again. Ami

Doug Armey
Doug Armey
10 years ago

JD: Well put. Having concrete goals that you focus on continually is not some magical thing but it seems almost magical in it’s power to accomplish your dreams. Your mind becomes attuned to opportunities and information that will lead to your success. I have practiced this for years and accomplished pretty much all the important goals I have ever set. In fact it works so well you need to be careful what you put down. Make sure it really is what you want.

Thanks,
Doug

J.D.
J.D.
10 years ago

Good questions, Financial Samurai. First, since subscriber counts have almost nothing to do with revenue, that’s a poor way to extrapolate blog revenue. Let me assure you that GRS would make far more money if it had no subscribers at all. If people were forced to come here every day, it would generate significantly more revenue. That said, GRS does make money, but I don’t share how much. You’ll find that, in most cases, public bloggers never share their income figures. My attorney, my accountant, and my wife have all advised me not to discuss financial specifics about the site,… Read more »

bethh
bethh
10 years ago

Your friend Chris’s quote was right on. I prioritize my spending around travel to see friends and maintain a connection with them. I don’t care about a new car (I told my dad I’d love a mini but wasn’t interested in car payments, and travel is way more important to me than a car fund) but I DO care about seeing a friend and celebrating her life.

(removed my comment about Financial Samurai’s math as J.D. answered)

Financial Samurai
Financial Samurai
10 years ago

Thanks JD. You’ve helped piece together the missing puzzle i.e. your income growth was more AFTER you achieved your paying off debt goals, and you do not make “$102,000” a month, but still make more than you’ve ever made in your life. This helps explain away the “asymetric standard.” There are old readers who’ve followed you from your humble beginnings, and then there are newer readers who know you as the titan of PF bloggers (or at least that’s how I view you!). The old readers will tend to know the JD as someone who has a very modest income… Read more »

Penny
Penny
10 years ago

Maybe today was just a rough day, but, continuing with the marathon analogy, I’m in a three legged race with someone who isn’t as “motivated,” shall we say?

Sigh….

Marcy
Marcy
10 years ago

I totally agree on the importance of setting goals, espcially as a working, independant adult. When I first graduated from university and started working about 6 months in had this funny feeling of…. “something” not being right. I realised that until then, goals in my life had automatically been set for me: Such as do well final year of school to get into university, then each semester there are more mini goals – work to finish the next set of exams, the look forward to summer break, then it was getting an summer internship, then it was graduating and getting… Read more »

Dave
Dave
10 years ago

That’s awesome. Congrats! I have finished a few and it is always a great feeling.

I think finishing such a tough task is overlooked by too many people. It definitely effects how you view every other goal in your life.

I did a half marathon on Sunday and will post video of my advice on how to finish during a race. You may want to check out Tuesday!

Dave
LifeExcursion

Erin
Erin
10 years ago

Firstly, congratulations on finishing that marathon. Regardless of how long it took you, you did it and that is tremendous! For me, setting goals has not been enough…I’ve needed to change my life, surround myself with reinforcement (in the form of frugal friends, reading books about getting out of debt, and daily blog checks)…in a world that is geared towards conspicuous consumption, getting out of debt can be a lonely choice.

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