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The Simple Dollar

Lessons from my worst money blunders: poor goal setting

Goal setting – with a clear deadline and a plan to get there – can help you avoid big money blunders.

By Guest blogger / July 31, 2010

You can't go very far in life without clear goal setting and a plan to get there.

Photo illustration/Imago Angle/Newscom/File

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Along my financial journey in life, I made a great number of mistakes. In this ten part series which runs from July 19 to July 30, I’m going to focus on ten of my worst mistakes and the difficulties and successes I’ve had in overcoming those mistakes.

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I had no specific goals, either in the short term or the long term.

That’s not to say that Sarah and I never thought about the future – we certainly did. The problem is that it was always in the sense of vague things that would happen “someday” and didn’t require any sort of active response today.

We dreamed of having a house of our own. I had a dream of a different career. We had dreams of having a certain number of children and providing all sorts of wonderful things for them.

Those are certainly great goals to have, but they’re so unspecific that they don’t mean anything. Worst of all, they didn’t require us to do anything today to start moving towards them, which enabled us to keep wandering through life.

A good goal, no matter how big it is, gives you an exact target to shoot for, a way of measuring your progress towards that goal, and the possibility of activity today to move you towards that goal. None of our goals back then had any of these things, which is why they weren’t really goals at all, but pipe dreams.

What woke me up and made me realize that something was wrong with this type of goal-setting was the fact that we were actually moving further and further away from these goals as time went on. As we got more into debt, we moved further away from having a house of our own and further away from my dreams of being a writer. We certainly weren’t doing a good job of financially providing for our son.

As we grew into our late twenties, we began to see that our big “dreams” were slipping away from us. It was a very, very painful time, one that shook us into making some serious changes in our lives.

What changed? One big change is that we started talking about these kinds of things in more detail. What did we both really want from our lives together? What do we need to do to get there? What can we do today to start moving us there? Addressing these questions with seriousness helps you quickly figure out what things you really want from life and whether you’re willing to work hard to have them.

The lack of goals earlier on in our lives cost us dearly. If we had these types of specific goals with specific plans in mind when we graduated from college – or even earlier – I shudder to imagine where we would be at right now.

How can you avoid this trap?

First, set the kind of concrete, tangible goals I describe above. As I said, a good goal gives you an exact target to shoot for, a way of measuring your progress towards that goal, and something you can do today to move towards that goal. If you’re having difficulty coming up with these things, it might be a sign that this isn’t really a key goal in your life (which isn’t a bad thing at all – getting rid of goals that you’re not committed to makes room for the goals you are committed to).

Second, constantly remind yourself of that goal. No day should pass without at least a bit of reflection on what you can do today to move towards the goal – and actual action on that idea. Again, if you’re not willing to take the daily action, it’s time to reflect on whether or not those goals are really in line with what you want out of life.

Finally, be willing to share these goals with others. Support from those most important to you can really make a difference in terms of whether you can achieve the things you dream of. Talk to those people about your goals and how you plan on getting there. Don’t be afraid to ask for help, particularly through the rough spots. It’ll make more difference than you can imagine.

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