KEY POINTS:
I hope one of the first things our new government does is set a big, long-term economic goal for the country _ one that we can all buy into.
The most effective way to set and achieve a goal is to make it a SMARTI _ it should be Specific, Measurable, Achievable, Relevant, Time-bound and In writing. An example of this kind of goal is: "We will have a mortgage-free house and $250,000 of investment capital by 2014," or, "We will have a net worth of $1 million by 2018."
SMARTI goals which are numeric cannot be fudged _ you cannot fib about whether or not you have achieved it. It is there in black and white and if you keep it where you can see it regularly, you will find it is powerful psychologically. You will do what you have to to achieve it.
You can have short-term goals, e.g. "We will have paid off the car hire purchase contract by the end of next year," but the long-term goal, the one representing financial freedom, is most important.
This goal represents the final point of what you want to achieve financially, and as such lets you plan a route map for how to get there. You know where you are financially _ that is your net worth, what you own less what you owe.
If you can establish where you want to be, in say 10 years, you can start to make a plan for bridging the gap.
We never achieved the Labour Government's SMARTI goal which had us in the top half of the OECD countries economically. Some might say this was not a SMARTI because it was not achievable.
I disagree _ it is achievable. We have not achieved our national goal because we didn't all buy into it.
We didn't for two reasons. Firstly, as a nation we did not want it enough _ it was never stressed repeatedly that a bigger and better economy would lead to better health and education, less crime and so forth. Secondly, we did not constantly remind ourselves of the goal.
I hope the new government sets a similar goal to that set by Labour and keeps harking back to it so the entire country knows where we are going. We will all be better off if it does.
And you will be better off if you establish a goal for your long-term financial future.
Each week best-selling financial author Martin Hawes shares strategies to help you grow your wealth. You can email your personal finance questions to info@wealthcoaches.net or andrea.milner@heraldonsunday.co.nz
