by David Bach
Believe me—sometimes all it takes to change your life massively for the better is a small action and a small success. I know from having helped so many couples with this filing system that it really can get you motivated to take massive financial action in your life…and that’s what the remainder of this book is about.
TAKING YOUR VALUES AND MAKING THEM REAL
Now that you’re getting organized financially, let’s get started on your goals. Having given more than a thousand speeches and workshops over the years, I know from experience that nothing can change a person’s life faster than defining a number of specific, meaningful goals and then putting them down in writing. Believe me, simply writing down a few meaningful goals can literally transform your future in just a matter of days.
There is one problem with this approach. The idea of “goal-setting” is such an overexposed concept that the minute they hear it, most people almost automatically shut down. Their brains go, “Oh, not that goal-setting stuff again! Give me some other secret.” If you are thinking this right now, I do understand. But hear me out, and then take 10 minutes to try out my suggestions. You’ve come this far. What’s a few more minutes?
So why do you need to set goals? Here’s the bottom line…
LIFE IS DIFFICULT
The fact is that it’s not easy to get good grades, or graduate from college, or find someone to love and then have a great relationship (or marriage). It’s not easy to succeed in work or business. It’s not easy to become wealthy. It’s not easy to raise good kids. It’s not easy to stay thin.
I could go on and on, but you get the point. Life is not easy. But that’s not the only truth that matters in this context. It also happens to be true that it takes just as much effort to have a “bad life,” in which you don’t get what you want, as it does to have a “good life,” where you do. So given the choice, why not go for the good life?
Even if you wind up falling short in the end, it’s still worth trying for a good life. After all, whether or not you win in the end, if you “show up for the game,” at least you get to play. Unfortunately, most people are not in the game. They simply let their lives happen to them. They live as if they were in a raft heading downstream without a paddle. Wherever the river of life takes them, that’s where they go. And you know where most of these people end up? On the rocks!
It’s sad but true. Most people who just “go with the flow” wind up complaining about where they “floated.” They go around saying life is not fair. Well, I disagree. Life is totally fair. You get what you go for. Go for nothing and you get nothing. Go for something and, even if you miss your main goal, you might still achieve a lot of good stuff along the way.
I’m not just saying this. Goal-setting works. It’s a fact. The world is filled with people who started out with nothing and wound up with more than they ever dreamed—simply as a result of having set goals for themselves. One phenomenal example of this is a woman we all know and love named Oprah Winfrey. Here’s someone who grew up poor, was sexually abused as a child, was told she’d amount to nothing, and yet became one of the greatest role models of our time. Now, Oprah didn’t wake up one morning when she was a teenager and say, “I think tomorrow I’ll have my own TV show and influence the lives of millions of people every day—and then when that’s over I will own a cable network.” She worked for decades, setting goals and battling against all kinds of obstacles to make it happen.
The same could be said of a man we all know named Michael Jordan. Arguably the greatest basketball player of all time, Michael didn’t suddenly wake up in his late twenties and say, “I think I’ll be the greatest basketball star who ever lived.” This was a guy who couldn’t even make his high school varsity team when he first tried out. People told him to forget basketball when he was young. But Michael had dreams, he had goals, and he worked against all challenges to make them real.
So how does this impact the two of you? You don’t have to want to be Oprah or Michael Jordan. I’m not asking you to decide right now to change the world or become the “greatest ever.” I’m simply suggesting that you and your partner sit down, take the five values we looked at in Step Two, and set yourselves five specific goals (at least one of which should have something to do with your finances) that the two of you intend to achieve over the next 12 months. In this way, you’ll create for yourselves that Purpose-Focused Financial Plan I’ve been talking about.
DESIGNING YOUR PURPOSE-FOCUSED FINANCIAL PLAN™
So what is a Purpose-Focused Financial Plan? A Purpose-Focused Financial Plan is nothing more than a list of things to do (your goals) to enable you to live a life in line with the values that are most important to you. Here are seven tips on how to define those goals, followed by a worksheet that will help you create your plan.
RULE NO. 1
Make sure your goals are based on your values.
As we discussed in Step Two, identifying your top five values may not sound like much, but doing this simple exercise can transform your life. That’s because the clearer you are about your values, the easier it is to base your goals on them—and 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 to plan your spending and investing around 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?
Of course, living the life you want based on your values doesn’t just happen. You have to make it happen. You have to design it. This means using the Value Circle from Step Two and getting your top five values clearly defined. And remember, don’t get hung up on perfection here. There are no “perfect” values or even “right” values. The idea is simply for you and your partner to start thinking and planning proactively on the basis of what is most important to you.
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.
RULE NO. 2
Make your goals specific, detailed, and with a finish line.
I can’t emphasize enough the importance of making your top five goals as specific as possible. On the worksheet, you’ll find five boxes designed to help you do just that.
Many couples want to be wealthier. Others want to be more romantic. Still others want to build a strong family. Practically all of us want something we don’t currently have.
Unfortunately, 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.
For instance, I would love to have a vacation home. Now I could say that one of my goals is eventually to buy one, and I could write down on my worksheet: “own a second home.” But what would that accomplish? Not much, because a general phrase like “own a second home” doesn’t help my wife or me focus on what we really need to do to get where we want to go. Where would this second home be? How much would it cost? What would it look like? When would I buy it? How long would it take us to save up for it?
On the other hand, what if I were to think my goal through and describe it this way: “Within the next three years, I intend to buy a five-bedroom, three-bath vacation house on the west shore of Lake Tahoe with a dock from which Michelle and I can go swimming.” Well, that’s something we can see. We can visualize exactly what this second home of ours looks like. We can also find out what a property like that would cost. We can figure out whether it’s a realistic dream for us. We can design a plan to start saving for it.
We can even draw up a timetable. For example, we might decide that our intention is to purchase our Tahoe house no later than the spring of 2020 and later that year spend the months of July, August, and December there.
Now our goal is starting to feel real,
to feel exciting. Perhaps most important, because we’ve included a timetable, we can tell if we’re on the road to making it happen or if we’re just fooling ourselves. If we get to, say, the middle of 2019 and we haven’t yet begun to put money away for the down payment on our vacation home or do any research on what sort of properties are available in the areas we like, that’s a pretty good indication that we need to rethink how serious we are.
Needless to say, your goal doesn’t have to be buying a dream house on Lake Tahoe. Getting your credit-card bills paid off over the next 12 months can be a specific and measurable goal. So can 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.
RULE NO. 3
Put your top five goals in writing.
I know it’s a cliché, but it also happens to be true: people who write down their financial goals get rich. It’s a fact. Study after study has shown that writing down your goals makes it much more likely that you’ll achieve them. Having been a goal-writer for years, I can tell you from experience that when you write down a goal on paper, even if you put the paper in a drawer and don’t look at it for a year, the chances are that what you’ve written down will come true.
Writing down goals is truly an amazing thing. It 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. The more real your goals are, the more excited the two of you will get—and the more excited you get, the more likely it is that you’ll make it to the finish line.
When you write down your goals, you make them important. When you write down important goals, you make your life purposeful.
RULE NO. 4
Start taking action toward your goals within 48 hours.
I learned the power of action at a seminar called “Date With Destiny” run by Tony Robbins. “It’s not enough to write down your goals,” he told us, “you’ve got to act on them.” His rule of thumb was that you should never leave a goal just “sitting there” without taking some action toward achieving it within the next 48 hours. The idea, he explained, was that 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.
Nothing I’ve ever learned about goal-setting has ever had as much impact on me—and on the results I’ve achieved—as this simple tip. What I’ve learned from Tony Robbins is that a cause set in motion becomes a life set in action. This is why our Purpose-Focused Financial Plan worksheet includes a box that asks you to write out your “48-hour plan.” This can be anything—but it has to be something.
Let’s go back to my example about purchasing a home on Lake Tahoe. Even if I don’t think I’m actually going to be able to buy it for five years, there are still things I can do to start moving toward my goal right away. I can get on the Internet and start reading about Lake Tahoe. I can contact a few realtors in the area and ask them to send me information on homes that meet my criteria. I can go on Zillow.com or Trulia.com to run a search for a home in Tahoe and even tell those websites to notify me when properties in my price range or search range become listed. I can plan to rent a home in Tahoe for a few weeks on VRBO.com or Airbnb.com so Michelle and I can see how much we enjoy being there for more than a few days. We can consider doing a house “swap”—whereby we exchange our home with for that of someone in Tahoe for a month by using a website like Homeexchange.com.
The point is I can “do something,” and I can do it within the next 48 hours. By taking this sort of specific immediate action, my goal becomes even more real to me and thus even more exciting. It’s this excitement that will ultimately create the lasting energy the two of you will need in order to see your goal through to reality.
RULE NO. 5
Enlist help.
There’s a huge myth out there that I’d like to bust: the myth of the “self-made” person. People typically use this phrase when they’re talking about some success they have achieved or the wealth they have accumulated, and, to be fair, they often do it in order to differentiate themselves from people who inherited their wealth or position. That’s fine, but the truth is that there is 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. No matter what the situation is, human beings need other human beings to help them move forward.
So when it comes to achieving your goals, stop and think for a second. Whom can the two of you turn to for help in achieving your top five goals? Don’t assume you and your partner need to do all this by yourselves. There are all sorts of wonderful resources out there just ready and waiting to help you make your goals a reality. Some of them are probably living right in your own home. If you have kids, perhaps they can help you. What about friends who may be able to offer assistance? Now move beyond the people you know and start thinking about people you may need to get to know.
While there’s nothing more important than sharing your dreams and goals with the people you love and trust, it also doesn’t hurt to share them with strangers either. 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.
I once had a woman in one of my seminars who worked as an administrative assistant for an adult education company but whose dream was to be an animation artist. Following the rules I’ve just laid out for you, she made her goal specific, gave herself a deadline, wrote it down on paper—and began telling everyone she met just what she was after. Sure enough, someone she met at a party told her about a job opening, and just four weeks later she was hired as a creative director at a start-up company designing online greeting cards. I promise you, it wasn’t a fluke. It’s just a matter of sharing your dream—and not being afraid to go for it.
Later on in this book, we’re going to cover things like retirement accounts, wills, insurance, systematic investment plans, how you can increase your income in just nine weeks, and on and on. Many of these things will require you to enlist help. That’s great. There is nothing wrong with asking for help. So make sure you include on your worksheet a list of the people whom you should be enlisting to help you achieve your top five goals.
RULE NO. 6
Get a rough idea of how much money it will cost to achieve your goals.
As you define your top five goals, you’re going to find that some may have nothing to do with money, while others are all about money. 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 a goal is going to cost money, and you don’t start planning and saving for the cost, you are not going to achieve it. Later, in Step Seven, I’ll discuss which types of investments you should use to pay for your dreams and goals. For now, just note in the appropriate box on the worksheet a rough estimate of how much money you think you’re going to need. (If you don’t have a number in mind right now, don’t worry about it; you can fill it in later.)
The reason this box is so important is that you may find that some of your biggest goals require almost no money. Which means you can get started on them right away. On the other hand, you may discover that some of your top five goals are so expensive that it’s not even realistic to put them down on paper. That’s not to say you should forget about them, but it may be a sign you should do some rethinking. Some goals that at first glance seem impossibly pricey might on closer inspection turn out to have cheaper solutions. For example, you may find that owning a beach hou
se is so expensive that, short of winning the lottery, you’ll never be able to afford it. But renting one for a few weeks each year may not be out of the question—and, indeed, it may be a better way to get you started on the road toward your ultimate goal.
The point here is that you need to get a sense of what it is going to take in dollars and cents to achieve your various goals. This will enable the two of you to do two things: (1) understand how realistic (or unrealistic) your goals may be, and (2) get yourselves started on a systematic savings and investment plan to accumulate the money you are going to need to achieve them.
RULE NO. 7
Make sure your goals match your values…as a couple.
I can’t stress enough the importance of making sure your goals reflect what both you and your partner want. Remember that goal I mentioned of someday owning a vacation home in Tahoe? It’s something I’ve personally wanted since I spent a summer there when I was 18. But now that I’m married, goal-setting is not just about me anymore…it’s about “us.” And just because I want something badly doesn’t mean Michelle wants it (and vice versa).
Michelle and I don’t have kids yet, and we’ve talked for a long time about doing some serious traveling before we become parents. But guess what? Like so many couples, we’ve talked about doing something and not done it. We’ve both been working so much that we’ve managed to take only two weeks of vacation in almost two years. Recently, when Michelle and I were discussing our top five goals, she pointed out to me that we weren’t getting any younger and that if we were going to travel, the time to do it was soon.
Viewed in this light, my goal of buying a house in Tahoe in the next three years doesn’t make a lot of sense. And indeed, after discussing it thoroughly, Michelle and I agreed that my dream of owning a second home would have to wait. Right now, we needed to focus on our goal and dream of traveling.
