The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
What’s Your BIG Financial Goal?
Setting financial goals is a great way to develop healthy money habits. In his book Built to Last, co-authored with Jerry Porras, entrepreneur Jim Collins explained the concept of a BHAG (Big Hairy Audacious Goal)1. While his BHAG idea was developed for businesses, you can easily adapt it for your own BIG financial goals.
In the spirit of Collins, we created our very own acronym to encourage goal-setting:
- ✓ B: Your goal should be BOLD; this is not something easy or expected.
- ✓ I: Your goal should INSPIRE you to take action; you should feel compelled to pursue it.
- ✓ G: Your goal should be GRAND in size; something that feels like a lofty, high achievement.
When taking the steps to set your goal, think of a dream that seems impossible to you right now, but you know could be achievable with solid planning and lots of hard work. We’re not talking about regular, very achievable goals such as buying a house or saving up the money you need to take a Caribbean vacay, either. While those are great financial goals to set for yourself, you might not be thinking BIG enough.
What makes it a BIG Goal?
A truly BIG financial goal is life-altering! If you were to achieve it, you would find yourself in completely new territory.
For example, if you were to own enough rental property that you could quit your day job forever and travel the globe, your life would be one of adventure, learning and leisure. You could retire at age 55 and move to Hawaii. Or maybe you just want to pay off your student loan and be free from overwhelming debt. Total game-changer, right?
How Do You Get to a BIG Goal?
There’s one surefire way to take the steps you need to reach your big goal, and that’s dividing it up into smaller “smart goals.” Start by doing research on your goal. Do you need more education to reach it? A fuller savings account? A higher credit score to get a good interest rate? Who do you need to network with in order to reach your BIG goal?
See what steps others have taken to reach your goal. Identify those who were successful and read about the path that led them there. This will help you refine your own list of mini-goals that will eventually get you to your BIG goal. In the earlier example about owning property, your initial mini-goals list might look something like this:
- 1. Seek advice from landlords
- 2. Research rental markets
- 3. Start saving for a down payment
- 4. Find potential rental properties
- 5. Get pre-qualified for a loan
- 6. Choose a property
- 7. Calculate expenses
- 8. Get a home inspection and appraisal
- 9. Purchase homeowner’s insurance
- 10. Close on home
- 11. Fix up home for rental
- 12. Start taking rental applications
Now, let’s say you start with mini-goal #1 and you reach out to a handful of local rental property owners. Several of them tell you they wish they would’ve paid down their other debts first before taking on a mortgage payment. You decide to add “pay off credit card debt” to your list before you even start saving for your down payment. That’s perfectly fine, because:
Your mini-goals should be flexible.
Remember, you’re working toward a huge goal, and that takes time. You might initially plan to reach your BIG goal in five years and find out along the way that it could take 10 years to complete every step on your list. Just adjust your time period and your steps and keep moving forward.
What Happens if My BIG Goal Changes?
You’ll want to track your progress as you head toward your goal. But a lot can happen in three, five or 10 years. Priorities shift, major life changes could occur and your financial plans may change.
After speaking with landlords, you may discover that you’re not ready to tackle the potential repair and upkeep bills that come with owning rental properties. You may talk to a financial advisor and find out that retiring at 55 would mean a life of ramen noodles and roommates until then. Changing your BIG plan doesn’t mean you’ve failed. And even if you do fail to reach a goal, even better opportunities2 may appear.
When faced with a major snag in your plan, decide whether to alter your timeline, your steps, or your BIG goal. In the example of saving for retirement, you might simply choose to move your projected retirement age from 55 up to 60. On the other hand, a potential property owner not wanting to pay for repairs and updates may choose to change their BIG goal to a different way of earning passive income.
The End Goal
The point of developing a BIG money goal isn’t following a “pipe dream” or setting yourself up for failure. If you’re taking the right steps — the ones we outlined above — you’ll be able to start seeing what it would take to turn your dream into reality. Then, you can either start working through the process you’ve outlined or update your BIG goal to be a better fit for your desires, abilities and willingness to sacrifice.
It takes hard work and dedication to achieve your financial goals. But even if you move on to other things or your BIG goal changes along the way, you’ll have created good financial habits that will last a lifetime.