If you have been reading my other blogs then you already know that I am not a big believer in reaching goals if it has anything that gets in the way of living your life.
Too many people start with a lofty goal like:
- Buying a new car from your own cash
- Saving up to go on a holiday
- Paying off my credit card by June
- Buying an investment property
The list goes on…
But for some reason you haven’t quite reached your target on any of them?
Are you one of those people who start with the best intentions but life always seems to get in the way?
Unlucky events that really do stop you reaching your target like getting sick the week after starting your jogging and you never really start it up again or an unexpected water heater breakdown, child breaks arm, etc…
What do these goals all have in common? They all require time, effort and consistency to reach the target. That is where it falls down because life will always get in the way.
So are we all doomed to walk around as overweight, disheveled unhappy people that never reach our goals while the lucky rich people driving around in Porsche’s pass you by? No we are not!
What we need to do is firstly break down the goal into bite-sized chunks so we can handle it, then find a way to automate as much of it as we can into our lives so it “just happens”.
For example, saving up to go on a holiday…. That is a lot of money and a vague goal. Let’s get serious on this one:
- First step is the goal itself. Where are you going? When are you going? Have you got the time booked out? If you research the actual cruise/flight/hotel you want to get to, then you can start to make it happen.
- Work out where you want to go and actually speak with someone on it. Work out the actual holiday and how much you will need.
- How long until you need the money? You will need to have saved up the money by this time so this one is important.
- Divide the amount you need into the time you have left and align that to when you get paid (huh?) In other words if you need say $5,000 by December (12 months) and you get paid weekly, then you divide $2,500 into 52 (52 weeks in a year) = $48.
- Can you afford to save $48 per week? If the answer is yes, then let’s get you on your holiday!
Now comes the important parts. This is what makes it happen.
- Setup a high-interest account with your bank (really easy to do these days, sometimes you can even do it through your Internet Banking) and put a “direct-debit” to go out of your account on the day you get paid for the $48 and into the other account (*)
*Get help from your bank or family/friends if you are unsure on how to do this, no excuses.
Why? Automation is the key. If the money comes out of your account the day you get paid, then firstly you know you have the money in there and secondly you don’t have to do anything… it is automatic saving!!
- Go to your boss and book in annual leave for the holiday. You don’t want anything getting in the way to you reaching your goal.
Sounds too easy? It is but how many people actually do it?
Well I did for one. We setup one of these automatic debits when my son was born for only $50 each week. Just by using automation and the power of compounding (see my other blog on how to make sure your child can afford a home when the time comes) he will have over $75,000 by the time he is 18 years old to put into buying a home (account currently attracts 5% interest pa).
You can apply the same method to any savings goal or even health goal (bit harder to work out and will require effort), just remember, break up the goal into specific parts and then automate it.
Did this work for you? If it has I would love to hear where you went, just post it on my wall on Facebook.
About the Blogger
Brad Dunn has been a property investor and working in the finance industry for over 15 years.
He is currently one of the franchise managers of the multi-award winning South Perth Mortgage Choice office but what’s really important to him is that 9 out of 10 of their clients would recommend them to a friend.