Growing up, I didn't really set a whole lot of goals. Its a practice I adopted my sophmore year of college after reading Napoleon Hill's Think and Grow Rich. One of my biggest takeaway's from the book was the idea of creating a "definite major purpose" that you must refer to twice daily; once in the morning, and once before bed.
I personally have my definite major purpose written on a small post-it in my car and next to my bedstand. It has my "big picture" purpose, as well as a few short bullet points highlighting 1-3 short to mid term goals. The last item it contains is my net worth target and the date I'd like to achieve it by.
Setting goals in this way creates a sense of urgency and personally helps me stay motivated each day. When I wake up and read my DMP and goals, my mind immediately begins creating a plan for the day that aligns with the text on my post-its.
One of my favorite tools out there to assist with goal setting is Mint.com's Goals feature. The following are a few goals I'm saving for, and Mint does a great job letting you know the amount per month you need to save to achieve the goal by your specified completion date. It will also let you know from time to time whether you are behind, on pace, or ahead of your targets. It's really a motivator!
Chuck Replacement Car Fund
Home Down Payment Fund
Another great tool is a simple net worth excel spreadsheet. The reason I like updating this (usually semi-annually) is it shows you your historical progress. My spreadsheet includes total portfolio balances, real estate holdings, liabilities, and any other miscellaneous accounts that make up net worth. By simplying copying these items over from Mint.com, I'm able to keep track of my progress over time. Mint.com uses zillow to approximate my home's value, so that's good enough for me.
Are you setting financial goals? How are you keeping track of these? Try these tools and watch your net worth grow over time.
My personal retirement goal is $3,500,000 by the year 2050. By my estimates, this will leave my wife and I with an approximate income of $75,000 in today's dollars with no debt and no additional savings needs. This, assuming a 3% rate of inflation, may require $200,000 in income. . . but who knows! All we can do is focus on increasing our savings rate, having fun, and making sure we remain on track.
I wish you good luck with identifying and following through on your goals, and feel free to share your thoughts or personal goals with a comment!