I have recently been reading a number of articles written by people who aspire to early retirement, actually, make that very early retirement. The blogging world seems to be host to a plethora of people whose working life would seem to be just commencing, but are intent on documenting their path to a life of leisure by the time they are 35 years old.

They even have a term for it, F.I.R.E and quite astonishingly it appears people are managing to achieve this goal of financial independence. Presuming of course, that we believe all we read! Their strategy is not at all complex and boils down to a very frugal lifestyle coupled with a saving ethos that would put Scrooge McDuck to shame.

But the one major component they do have is their ability to recognise the importance of setting goals. And not just setting goals, but also the desire and commitment to achieve them.

As I have said in other posts, investing is a strategy not a goal. It is through investment that you will achieve your financial goals, but to do that you need to be very specific as to what your goals are. Doing this enables you to tailor specific investment actions towards the achievement of those goals.

So think long and hard about what you want to achieve financially. This is the serious part of investing. No one wants to accumulate money just for the sake of it; rather it’s the purpose we want to put that money too that is important.

So to make this task a bit easier, here is a system called S.M.A.R.T. goal setting. Adopting it you will give you framework to work with and will go a long way to ensure your goals will be well and truly met. So let’s take a look at the system.

The S.M.A.R.T. Goal

S – Specific

Since you have spent a good deal of your time thinking about exactly what you want to achieve it’s now time to be specific about it. The more specific you can describe your goal the better the chance of achieving it. So rather than “ I want to have a million dollars”.

A far more specific financial goal would be ‘ I want to accumulate one hundred thousand dollars through investment. I will only invest in shares and their associated derivatives from the top 50 companies by capitalisation listed on the Australian stock exchange”.

The more detail you have will give you direction and therefore helps you to derive strategies fo achievement .

M – Measurable

Having measurable goals will mean that you can recognise when you have achieved them. It is also a very good idea to breakdown you major goal into smaller goals, each measurable of course. You really do need to be specific and as this is a discussion around investment, setting a dollar figure is all that is required.

Developing measureable goals makes it very clear as to what it is your wanting to achieve. “Becoming rich through investing” is merely a wish and who knows what the meaning of rich is. It can be defined differently depending on the person you are speaking too.

A – Attainable

The next factor with goal setting is to ensure your goal is actually attainable. So you really need to make sure it is not merely a ‘pie in the sky’ wish but something that can be achieved with the requisite amount of time and effort. Setting your sights on becoming a billionaire before you are a millionaire will only cause disheartenment through non achievement.

To provide the motivation of achievement your goal must be able to be attained. Of course you shouldn’t be discouraged from setting the bar high either. Just ensure that you have the wear with all to achieve it

R – Relevant

As this blog concentrates on investment I am assuming that those of you reading this will be looking for ways of accumulating more money. Therefore setting a monetary goal is obvious.

But just make sure you are really “feeling the need” so to speak. Money is good because it buys stuff, but beyond that it‘s pretty useless. So be sure you are accumulating for the right reasons and are comfortable with those reasons.

So make certain your goals suit you as a person and will provide you with the happiness you’re after. Making money for the sake of it is only good for a very few people.

T- Timely

Make sure that your goals are timely. Construct a timeline of achievement and be specific. If you want to accumulate $10,000, make sure you also select a date which you want to have achieved it by.

Not only does this give you a deadline it also provides a method of measuring your progress. Re- member, it has to be attainable as mentioned earlier, so give your date a lot of thought before you commit.

It’s certainly not a race against anybody else, so be sensible when setting your deadline. Slow and steady goal achievement is what it’s all about.

And finally, make sure you break down your goal(s) and turn a large amount into small chunks which are easier to achieve. For example, you could aim at weekly, fortnightly or monthly targets, just as long as they all add up to your goal.

If at all possible try and automate. – If you’ve worked out a weekly savings amount, get your bank to deduct this for you. This will certainly save you requiring both the effort and certainly the willpower!

And most importantly, make sure you monitor your progress by keeping a close eye on how you are going compared to your target. And don’t forget to ‘celebrate’ when you achieve milestones!

Setting and achieving goals for financial success is not always going to be a smooth path just because you have done it. But at least it will provide a path were one probably didn’t exist before.

The very best of luck with your investing.

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