David Bach is the best-selling author of the eight books in the Finish Rich series as well as Fight for Your Money and The Automatic Millionaire. In the latest book in the Finish Rich series, The Finish Rich Dictionary, Bach defines 1001 essential financial terms and provides 10 helpful essays with topics ranging from understanding a credit score to planning for retirement. Below we have excerpted five of Bach’s ten most interesting money mistakes people make.
The Finish Rich Dictionary defines and demystifies the language of finance, giving readers the power to understand their finances, manage their money more effectively, and plan for their future.
Make sure your goals are based on your values. By identifying your top five values, you can then base your goals on them. The more you base your goals on your values, the more likely it is that you will achieve them. After all, can you think of anything better or more exciting around which to plan your spending and investing than the things that really matter to you? And what could matter more than the values by which you and your partner want to live and grow? Ideally, each of these top five values should lead you to a specific key goal. You’ll write down a value and then, right next to it, a related goal on which you want to focus your time and energy.
Make your goals specific, detailed, and with a finish line. Wanting something and getting it are two different things. In order to achieve a goal, you must know precisely what it is that you’re after. In other words, you need to take those vague ideas and thoughts you have about what sort of life you’d like and make them specific. Your goal could be to buy a dream house by a lake. Or it could be getting your credit card bills paid off over the next 12 months, going to Hawaii on a dream vacation sometime in the next two years, or cleaning out the house from top to bottom in the next three months.
Put your top five goals in writing. Study after study has shown that writing down your goals makes it much more likely that you’ll achieve them. Writing down goals does something to you subconsciously that often brings the goal to you. For one thing, writing down your goals helps you make them more specific. For another, it makes your goals seem more real to you.
Start taking action toward your goals within 48 hours. If you don’t get moving immediately toward your goal, even if only in a small way, chances are you’ll never get moving at all. Even if it will take years to achieve a particular goal, there are still things you can do to start moving toward that goal right away. And you can do it within the next 48 hours. By taking this sort of specific, immediate action, your goal becomes even more real to you and, thus, even more exciting.
Enlist help. There’s no such thing as a “self-made” person. No one ever reaches a really important goal without some sort of help from some other person. It’s important to share your dreams and goals with the people you love and trust, but it also doesn’t hurt to share them with strangers, too. You never know—the person you’re sitting next to at a dinner party or a lecture may be in the perfect position to help you make your dream a reality. If you keep your goals to yourself, you could miss your big chance.
Get a rough idea of how much it will cost to achieve your goals. You need to get a sense of what it will take in dollars and cents to achieve your various goals. This will enable you to do two things: (1) understand how realistic (or unrealistic) your goals may be, and (2) get yourself started on a systematic savings and investment plan to accumulate the money you’ll need to achieve them. Some goals will take almost no time to save for, and some goals may take a lot of time and investing to reach. Since it’s important to know which is which, part of creating a Purpose-Focused Financial Plan involves estimating how much money you think you will ultimately need to pay for your top five goals. So ask yourself, What is this goal going to cost? How much do I need to start putting aside each week or month to help me get there?
If you live with a partner, make sure your goals match both your values. What’s the point of being with someone if you don’t share your most intimate dreams and thoughts with them? If you’ve got kids, share your dreams with them, too. Ask them what they’d like to see the family doing over the next three years. Ask them about their values, and then work together on a family list of five things that you all want to accomplish together
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1 comments:
I'd say that the most important thing is to Control the controllables.
A lot of people worry about the things that they can not control.
For example you can not directly control whether you lose your job or not. You can only influence it by being good at your job.
What you can directly control however is things like "what you do with your money".
Your goals can be things that you can not directly control but you should always be able to break it up into parts that you can control.
Roman
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