Over the last couple of quarters, we have looked at Jocelyn Black Hodes’s article, 10 Things Rich People Know That You Don’t. As we roll into a new year with goals and resolutions all around us, let’s take a final look her list:
- Start early
- Maximize contributions
- Never carry credit card balances
- Live like you’re poor
- Avoid temptation
- Be goal-oriented
- Get educated
- Diversify your portfolio
- Spend money to make money
Indeed we find that “goal-oriented” is a trait common to financially successful people.
Be Goal-Oriented. As the author points out, “goals are often overshadowed by the daily stresses of life… they lose meaning and influence over your behavior.” In order for goal-setting to have a meaningful impact on your financial success, your goals must be important enough to influence your behavior, and not just for a month or two, but for however long it takes you to accomplish those goals.
Start by listing the things that are most important for you to accomplish and the reason for wanting to accomplish each goal. For example: “I want to pay off my car loan six months early and commit to driving it another two years so that I can begin contributing to my employer’s retirement plan.” Review that list and prioritize it. Finally, set a detailed and realistic plan to accomplish your goals. If your goal is to pay off your car loan six months early, determine how much additional monthly payment you will need to make to meet that goal. If the additional payment is reasonable, set the plan in motion. If the additional payment is more than you are able to pay, reassess the goal and/or the timeline.
You can find helpful loan calculators at numerous websites, my favorite is bankrate.com. These calculators allow you to determine when your loan will be paid off based on your current payment, and how much more quickly it will be paid off if you increase your monthly payments, make additional annual or one-time payments.
It’s worth mentioning that being goal-oriented can really help improve your performance in the other areas that the author mentions, such as “avoiding temptation” and “never carrying credit card balances.”