Episode 1 | Goal Setting for Financial Success
We're thrilled to kick off our journey with you by diving into a fundamental topic that can make all the difference in your financial journey: goal setting.
In this episode, we explore how consistency in goal setting and habit formation can distinguish successful individuals in the financial realm from those who struggle. We delve into the importance of having clear, specific goals and the actions necessary to achieve them. Drawing analogies from fitness and personal anecdotes, we illustrate how setting measurable goals can lead to significant progress and long-term success.
Join us as we discuss:
The role of consistency in achieving financial success
The significance of setting clear and specific financial goals
Practical examples of goal setting and the actions required to meet those goals
The power of compounding interest and how it can work to your advantage
Tips for reviewing and adjusting your financial plans to stay on track
Whether you're aiming to pay off debt, save for retirement, or improve your overall financial health, this episode provides valuable insights and actionable advice to help you stay focused and achieve your goals. Grab a notepad, write down your goals, and start taking consistent steps towards financial success with us.
Tune in now and begin your journey to enriched wealth!
Transcript
Speaker 1
00:00:04.00
We are recording episode one, so we're really excited to kick off our first episode. And look, there are a lot of topics we could have talked about for this episode, but we wanted to talk about a concept that we see is really separates some of those really successful people out there from those people who struggle a bit more, especially in the finance space. And so the topic that we're going to talk about today is consistency. And consistency sounds like what's what's that got to do with finance? And we'll let's unpack
00:00:34.38
and as we get along. But I really think that this is one of those areas, especially in this day and age where there's lots of noise, lots of distractions, lots of things that can take us down other paths, lots of news stories that could take us in different directions. Consistency is something that requires patience and look it's probably not the most sexy topic in terms of it's not, you know, it's it's like Oh well that's not going to get rich quick or things like that. But this is one of those things that we see actual success and long-term success and people actually really satisfied with their outcomes as well too is when they can
00:01:09.08
like applying consistency to what they do. So consistency is around your habits and building great habits around your finances, and unfortunately, there is no quick win to this. It's a little bit like I'm going to use the analogy as we go along around going to the gym or working out because I think a lot of people can relate to that. It's, it's a bit of a different area, but it's got a lot of similarities to finance. And just like the first time you might go to the gym and you, you, you do a workout, you come home feeling exhausted
00:01:43.28
and then you get up the next morning and probably don't look a lot different from what you did the day before. But what it is is that consistency of continuing to go back, doing the reps, getting on the treadmill or how that exercise might look over time will transform you. And it's the same with finance. If, if we are consistent in what we're doing, if we don't get distracted by the new technique or the new way of doing things or if we're going to try this this week and this the next week, we will actually seek some consistency. But with all things finance, consistency is only relevant if we know
00:02:17.55
working towards say the first step in in all of this is actually your goals. And this might sound like all I thought talking about consistency and we're talking about consistency, but consistency involves being consistent with your actions. So whatever those actions look like, they need to be consistent, but they need to be actually adding towards progress. But how do you know you're progressing if you're not actually setting goals? So if I asked you right now to think about what is your 12-month goals around your finances, what's your three or five year goals? And then once your 10-year-plus goals as well
00:02:51.95
say do you actually have you actually written them down, do you know what they are and are you working towards them? Because what I find is a lot of time people have and it's it's it's fine, we're we all fall in that bracket. And I'm going to use a couple of examples for myself here because I think sharing personal experiences always always a great thing. But when we don't have specific goals it means that we don't necessarily have specific actions or measures to know how we're getting there. And So what we might be consistently doing is consistently failing or consistently making decisions that don't take us towards our goal.
00:03:25.20
And I just want to rate it, quote from James Clear. He wrote the book Atomic Habits. And and I love this because this is part of thinking through what am I being consistent with? How do I be consistent? How do I continue to head towards where I want to go. So I'm just going to read this quote, which is the first mistake is never the one that ruins you. It is the spiral of repeated mistakes that follows. Missing once is an accident, missing twice is the start of a new habit. And when when we are being consistent with our finances, it's those bad habits along the way that will ruin us.
00:03:59.73
And it doesn't have to start big and it doesn't even have to finish big, but it can impact you along the way. So
00:04:06.62
the first thing we do, we do need to talk about is goals. And I want to give you an example of one of my goals. And so I sat down and start of the year and my wife and I, it's usually a New Year's Eve thing actually. Once the kids are being put in bed, well, we'll reflect on the year, what's what's going on and we'll sort of talk about the year ahead as well too. This year we actually started talking about it before New Years because it was like, well, we actually want to plan and get ready for it. And I'll make it sound like we're really organised and we're really good at hitting our goals. But I think if we don't have anything, when we get to the end of next year, when we get to New Year's Eve again, how do we measure where we've been and where we're going
00:04:40.86
and what we want next? And I think a lot of times when we talk about goals, we don't actually take that long or that often to sit down and say what do we really want? And that might be what do we want out of life, what do we want out of our finances, out of our job, out of our relationships. And So what happens is, is that we get to the end of the year and we don't really have a measure to say, well, we better and that will not. But what happens when we set really good, clear goals is that then we have a really good, clear way to get there. And I'm going to use examples for myself. So this year I said I wanna I wanna
00:05:15.13
start getting fit on. So one of my goals was that I want to get fit, right. And so that seems like a really nice goal. And you know, I'm I'm, I'm not. I I wouldn't say that.
00:05:25.98
I've done a lot of physical activity over the last couple of years. We've got some young kids and I find most of the physical activities being running around, chasing after them and then you just sort of crash at 9:00 on the couch. But I I want, I want a little bit more than that. I actually want energy for my kids. So firstly, my goal is I want to get fit
00:05:43.25
and anyone goes, well it seems like the goal, that seems like a great thing, right? What actions are going to take to get fit? And so then it's looking back saying, well I could go to the gym, I'll go for a walk, could go for a run, I could go for a bike ride, I could catch up with friends and get a kayak and go out and swim around Lake epilogue or different things. Or you might have another body of water close to you. But at the end of the day there are lots of different activities I could take to getting fit. But when I get to the end of the year, how do I measure that I am fitter than I was at the start of the year? Have I done anything to even set a baseline or say where I am?
00:06:17.99
Yeah. And I've done anything to measure and say, well, I need to be here, I need, I want to be at this weight. I want to be at this, I wanna, I wanna do that. So when we have really unclear goals, what it means is that we can set really unclear actions to reach those goals and then we never know if we're actually successful towards those goals. So when we talk about finance and we talk about consistency, we want, we want to be heading somewhere and and what that does is that gives us that feeling of progress and like we're heading towards that direction. So the first thing is to actually sit down and think about your goals. And the reason I say this too is that we have clients who come in from time to time and people that we meet.
00:06:52.98
And we asked them what do you want like whether it's retirement or for the next 10 years. And a lot of times it's it's really simply just
00:07:00.20
I want to be more wealthy or I wanna retire at this stage or you know, but it's the clients are coming to go. This is what I wanna do. This is what I wanna retire. This is how how it looks or this is I wanna pay down debt or I want to be able to get here within the business.
00:07:14.46
All of a sudden I've said it clear goal and now they've got a clear way to measure progress towards that goal. What it also does is that if we've got a clear way, if we've got a clear goal, then we also have a clear understanding of the actions we need to take. And also to which I find more and more these days is reducing the noise around the things that we don't need to do. So
00:07:37.45
not fiscal was I want to get fit.
00:07:39.78
I actually went back after a bit of reflection and thinking through some of the things that we talked about with clients and things like that to say I need to be much more specific because if I'm not specific, I'll get to the end of the year and say, yeah, maybe I'll fill up, I don't really know. And so I would just be going off of feeling and I wouldn't actually have any sense of measure or any sense of idea. And while it's good to have a feel, good feeling, I feel fit at the end of the year, great. But how do I, how do I even measure, how do we even know? So what I've actually written down is, and I'm going to say it here and I'm going to be holding myself to it then and maybe I'll have to bring updates.
00:08:14.39
The wise for two on how I'm tracking is I want to be able to run 10K in 45 minutes. For me that feels like a goal. It's a stretch, but it feels like a goal that that I want to get to. But what it what it's done is it's made it very clear that well, if I'm going to be doing that I need to be out putting time on the road running. If I'm out swimming, I'm not going to hit that goal. If I'm out riding a bike, I'm not going to hit that goal if I'm in the gym all the time lifting weights, which clearly, clearly are not. But if I'm in the gym lifting weights or or, you know, training for 100 metre sprints, I'm not going to hit that.
00:08:49.74
But at the end of the year, I and along the way I have a clear way of knowing if I'm progressing towards that.
00:08:55.63
And I have a clear way of knowing that I'll hit that goal at the end of the. And what it will then do is help me have consistent actions along the way. So does that does that make sense to everyone? Is that is that fair enough that we need clear goals if we're going to have consistent processes and habits in place to reach those goals? So the first thing is I want, I want you all, whether it's now you hit pause or whether it's at the end of the episode, to actually grab a piece of paper and write down your goals and then come back and say are they specific and do I actually have actions to get there? If you don't have actions to get there or it's not clear enough that you know the actions you need to take,
00:09:31.43
rewrite them again. Really think about it. And. And this takes time. And unfortunately in our world where we get distracted and we can just pick up the phone and watch something else, all of a sudden we haven't actually really thought about what we want and how we want to get there. And I think that that is so key if we actually want to make progress and we want to head in the right direction. So when I come back to what we see successful people do is they are consistent, but they are consistent because they know what they are consistent towards, not what they're heading towards. So write down some goals. Dream big. You know, the only way you're going to hear a big goal is if you dream about it, write it down
00:10:05.75
and then start to work towards it.
00:10:08.11
And I heard a really good concept the other day at in a book I was reading. It was like, if you said a really big goal, it's actually actually really helps clear some of that noise around what do I need to do to get there. And I'll use another example a couple of years ago and talk about running, wanting to do 10K and 45 minutes. I actually was trained to do a half marathon and there'll be some people out there that go half. Where's the other half? And then some people going half marathon 21 K that sounds like a very long way and and for me it was when I first started on that journey it was a long way it was
00:10:42.72
I'd never run more than five cases and I thought well I don't need to run more than five cause when am I ever gonna run more than 5 kilometres in my life? I have a car or if I'm desperate I'll ride a bike or I'll find a motorbike or catch a bus. There are plenty of other things I can do that I don't need to run more than 5K and but I got to know a guy and he's a really good close friend now he's actually he he's run ultramarathons back in the day. Luckily I when I met him he hadn't run for we hadn't run a lot in in a couple of years before I met him. So luckily he was a bit closer to my fitness level
00:11:17.18
and he wasn't expecting me to run go out and run 90 kilometre ultra marathons. But he was coming from a completely different perspective on what 1/2 marathon looks like an ID. But he said look I wanna run with someone and I said I love that idea I wanna I wanna do something like that something that that I can and achieve not just get fit. So we we would get up early and this is pre-kids so getting up early seemed like like I was a bear with a sore head. I'm a night person. I'm not a morning person. I've learned to be a morning person. A little bit more now, but we would get up
00:11:51.90
or in the morning would go for a run, would get up early on Saturday mornings. I'd leave my wife sleeping in bed saying that I'm so happy for you and would be out pounding the pavement at seven, 8:00 in the morning at freezing cold winters. We would go do 10K's up and down One Tree Hill. We'd go out long out along the lake and run along paths and different things like that. So it was it was a lot but there were weeks that I didn't I didn't want to do it and there were days that I really didn't want to go for a run and so some days
00:12:25.37
getting just doing 5K felt like an achievement And then other weeks man I felt like I could I could run 10/15/2020 K so but we had a clear goal that we were going to do the half Melbourne marathon. And So what that meant was that we were clear that when we're getting out and we were training that's what we were training for and so we were making consistent steps towards that. So we started off with one, one run a week and then it was two runs and then it was three runs and then it was some focused runs around building strength and building endurance and things like that. So
00:12:59.49
we did, we did a whole lot of, a whole lot of work around achieving that goal. But if we didn't have that goal, well we just sort of casually go for a run. And so there wouldn't actually ever be that marker of progress and success. So for me that was a journey where I learned that having those specific goals really drives specific actions towards those goals. Hopefully, I've talked enough about goals, but I think and will come back to this from time to time because I think goals are such an important part of how we achieve success because we don't have that. Then what does
00:13:33.92
Access may? Well it's you're successful, but actually having that goal of saying, well that's a market for success and I know that I'm progressing towards that and I know I'm on the journey towards that. And that's where we can build consistent habits and actions around achieving that goal.
00:13:52.68
I want to talk about consistency as well too, because consistency means and if I come back to that running metaphor some days that we get out and do those actions, it kind of feels like hard work. It's going to feel like really hard work. So if it's saving long term or it's building up that you know it's investing or it's, you know, you've got that rental property that you're paying down or it's even just paying off debt your own, There'll be days where you feel like I just want to throw it all in. And it's those days that you then need to bring back out why you're doing it. Why are we going down this road arts for that goal. It's because I know I'm going to feel so much better
00:14:26.78
after all paid off that credit card. Or I'm gonna feel so much better knowing that I can retire at 12 months sooner or I'm gonna feel so much better knowing that I've started making those decisions that will take me to wards. That thing that is really meaningful and I think that's where the distractions come is, is sometimes it's easier to trade that longer-term bigger achievement goal for something smaller now. And if we didn't have a deadline and we didn't have a specific goal that we were setting when we ran that half marathon, it would have been very easy to just sleep in or send him a text. Send my friend to text and say, hey, maybe not today and
00:15:01.05
maybe not today. If I go back to that original quote would be that first mistake of actually saying, well, that's when we stop being consistent and we create new habits of not getting out and doing what we need to do, not putting in the reps, not putting in the time we need. So consistency is about putting in those reps Bill Gates has a great quote here. He says people overestimate what they can do in one year and estimate what they can do in 10 years. And I really want you to consider where you were 10 years ago. And we've done, we've actually done this for a few clients as a bit of an activity. And so fun activity I find is to go well, where where was I in 2014?
00:15:35.25
Did it look like in 2014 walking on a car was out driving. What was the job? What was the salary? Where was our living? You know for us that was 10 years ago was pre kids it was it was a completely different world to where we are now. But how far? Like if you had asked me in 2014, guess what you're doing in 2024. You'll be recording a podcast and you'll have four young kids and you know all of these other things that have gone on. I'll go, Oh yeah, OK, sure. But we're here and that's where we. I think sometimes looking back helps us also look forward. So I would say when you're setting your goals, don't underestimate
00:16:10.36
what you can do in 10 years, but also don't put, don't put things out there that you may not get too in 12 months and feel really disappointed about it. What you want to do is set goals where you go. I can progress and I can get towards that. And then what does that mean next time? What does that mean when I achieve that they're not can go to the next level
00:16:27.59
Charlie Munger. So the late Charlie Munger who was the the partner to Warren Buffett,
00:16:33.70
he talks about compounding interest and I think one of the big things in finance that we forget or not necessarily forget but that we don't always focus on is the power of compounding interest. And I would say go and do a bit of research if you want to look more into compounding interest and just the impact over time, trust me it works because that's what the banks do when they loan out money. They are they are leveraging compounding interest against the people taking out a loan. But on the other side we can use it for for our own financial success as well. So the late Charlie Munger actually talks about compounding interest
00:17:07.83
as the eighth wonder of the world. And if you think about it, I can never tell what the other seven wonders of the world are. But to for someone so successful to coin it as a wonder of the world means that it's very important to what you do. And so he says the first real of compounding interest, which I would say is the main one, is to never interrupt it unnecessarily. And that is we need to be consistent. We need to keep doing the same things over and over and trusting in the process that will get us to the goal.
00:17:36.80
And so one of the big things to think about is compounding interest and you can go and find calculators online to sort of show if I put away $50 a week, $100 a week, $200 a week, whatever it looks like for you, if I'm putting that away, what does that mean? Or if I'm paying off debt that little bit quicker, how does that impact over time? And so finding a calculator, we might be able to share one or two in the notes as well. Is that in the show notes that you can go to but those those calculators will
00:18:06.35
show you will exemplify the power of compounding interest and over time that original investment will be what you're earning and more and what we've seen from successful people and we've seen a lot of people over the years in in lots of different states. The really successful people are the ones that have set and forget and and and they're the ones not set and forget altogether but trust in the process. So I'm investing in the market for the long term. I'm investing in that property for the long term. It's not a I'm investing today and tomorrow based on a news article about something I'm going to change my mind.
00:18:40.81
It's I'm investing and look what I've seen plenty of portfolios and some of the most successful portfolios don't have things that would shoot the lights out. They have things that they've just consistently added to over time and that's where we see the success. But it takes time and it takes patience. And a lot of people, if they don't have those longer-term goals and those bigger things that they're reaching for will get distracted, will change their mind, will go Oh well I'll do this or I'll change it to that And that's where they interrupting it unnecessarily. And what they're doing is they're actually foregoing that future benefit, forgoing that future growth, because
00:19:15.60
they are just running around with whatever the latest thing is or whatever the latest fat is. And and and and look it. Keeping your eyes and ears on things is OK, but is it helping you in your goal or just a distraction? Is it going to be better for you in the long run or is it just noise at the end of the day? And a lot of times there's a lot of feel-good things out there. But if I go back to my example of running a marathon, I could have done heaps of different things. But nothing replaces actually going out and putting kilometres on the legs. Nothing replaces actually getting out there and running
00:19:49.51
and it's a sign with finance. Nothing not there. There is no book that you can read, no YouTube video or even podcast. If I can say that, that you can listen to that will change unless you're actually going to take action as well to just reading and learning is not enough. You've got to start putting in those reps What are you putting in those reps too? Well, that's where we come back to what are the goals and what are the actions we're going to lead to, to get to those goals. Some of the other things that consistently help people with their finances is reviewing as well. So many people, and I mentioned it earlier, said forget some things are really good.
00:20:24.14
Don't forget, so don't, don't don't look at the portfolio every day unless you know that you're not going to be swayed by news and markets and stories and fear and all the other things that are out there vying for your attention. But also to make sure that you're keeping on top of things, make sure you know the numbers. There are a lot of people that I meet where I go, well, what's your budget? And they have no idea. They have no idea what they're spending where. And it's like having a look at where your subscriptions are at. Might start off with Netflix or Stan, and then you've got Chao when you've got Disney Plus and you've got
00:20:58.34
all the other different ones out there. There are so many out there. Do you need them all? Which ones do you actually use? What's actually giving you value? Or again, what's distracting you and not actually helping you on the progress you're making? So maybe it's cutting a couple of subscriptions so you can go out and run or go to the gym.
00:21:15.68
Also to review other expenses. So whether it's utilities, a lot of times people get themselves in, they forget that they haven't actually looked at what they're paying for they know when they get the bill, but they don't actually know what's the rate I'm paying on that on that gas or that electricity. Can I get better results elsewhere? Can I do something else. So it's really reviewing any interest rates as well. If you're with a bank, call the bank and ask if they can do a better rate. You'd be surprised how many times they can. But if you don't ask then the answer is always going to be no or the answer is always going to be that's what it what you've got is what
00:21:49.28
we've got and and so it's always good to ask and two sometimes it's it's actually having enough confidence to go and ask it. It's OK to get a know but if you don't ask then guess what you'll never know whether you've actually got that. And I see for a lot of people, a lot of times they can review their expenses and they can find 2, three, $4000 worth of savings by talking, you know, looking at what they're paying on their loans, looking at where their expenses are going, maybe choosing to cook a meal at home rather than going out again. And on all those little things that and you go, well, you know it, it's only it's,
00:22:23.60
you know, $50 a week turns into 2 1/2 gramme for the orchestra with 2 1/2 gramme. We could invest it. You could pay off more loans or you could use it for a trip away. Might be, might be a small trip for us when we've got 6/6 beds to fill. That doesn't always go as far. But all I'm saying is that there are other things that you can do. But again, if you're not consistent with it, if you're not consistent with saving, if you're not consistent with reviewing where you're at with your expenses, knowing where the money is going, what you're doing, you are not going to see results. You're not going to see outcomes. And if you're not knowing what goal you're going for
00:22:57.79
if if the goal is to pay down debt, what are you actually doing to get there?
00:23:02.44
The goal is to be debt-free in five years. What's the plan to get there? How how are you doing that? What are the actions you're taking? Are there actions, other actions you can take as part of that. So that's really what I want to talk about today consistency. I know I've probably rambled on a little bit about goals and running a half marathon. But really all I wanted to do was highlight to you that there are many things you can do. You've got to take the action for it. But you've also got to have the patience that the action you're taking will pay off in the long run and not get distracted by other things. If you're getting distracted, if
00:23:36.67
if you're finding there's a lot of things, try, try. Just start off with what can I cut out. And a lot of times, cutting out and clearing some of the noise will help you clearly know where you want to go and what you want to do and what you want to achieve. So in summary,
00:23:51.53
consistency is one of the huge keys to success in finance. To be consistent, we have to know where we're going and what actions we're gonna consistently take to achieve those goals. So set your goals, set the actions you need to take to get there and review along the way. If you have a goal, then you know that you're progressing to that goal. If you're reviewing for the sake of reviewing and not knowing why, then you're left floundering or you're left going. I don't even know what I'm doing this yet. It's all fine. Review with the intent of saying how do I improve and get better and get towards my goals so that that is out
00:24:25.63
take away for today. Consistently work towards goals that you've set and you'll be amazed at where you're at in 10 years' time.
00:24:34.47
Wish you all the best on that journey. Wish you you know. If you've got questions, please ask them. Please reach out. We wanna help people reach their financial goals. We want to help people reach their destination and we also to want to help people improve those habits or start those habits that will get them there.
