How Setting Goals Can Help You Reach FIRE

By firebynumbers

A lot of people within the FIRE community have one long term goal, to reach FIRE. This is a lofty and relatively long-term goal. If you are early on in your FIRE journey it might simply feel like it is too far away to be realistic or even achievable at all. This is why it is important we also set short- and medium-term goals that will lead us to our goal of reaching FIRE, or whatever long-term goal we do have in our own lives.

To be an effective goal, it cannot be as simple as saying “I want to reach FIRE”, although that might be the result of reaching your goal, it is not concrete enough to have a significant enough relevance in your life. Instead, for a long-term goal, try something like:

“I want to reach my FIRE Number of $1,250,000 by January 2027”

By adding in definite numbers and dates, it makes the goal a lot more impactful and will leave you more focused and determined to reach the goal by this date.

Types of Goals

There are a whole bunch of personal goals we can set for ourselves, such as the following:

Career – what do you want to do with your career, what stage do you want to reach?
Financial – How much do you want to earn and by what age? FIRE related goals
Education – Any specific knowledge you might want to acquire? Is there anything relating to education you might need to reach other goals (for example – career)
Family – Do you want be a parent, do you want to be in a loving relationship, do you want to be close to your parents?
Artistic – Do you want to achieve any artistic goals?
Attitude – Are there attributes about your personality and attitude that you do not like, do you want to change?
Physical – Do you have any athletic achievements you want to accomplish? Do you want to improve your overall health?
Pleasure – Do you want to ensure you have enough time in your life for fun things!
Public Service – Do you want to volunteer, donate, help any other way you can think of?

I won’t go into all of the above because this post would be too long, since this is a blog about FIRE I will just focus on financial goals. Although I should mention that Career goals will also play a big part in achieving FIRE due to earning potential.

SMART Goals

A useful way of making goals more practical is to make them SMART goals:

S – Specific
M – Measurable
A – Attainable
R – Relevant
T – Time-Bound

This simple mnemonic will help you create goals that are practical and much more achievable.

Additional Tips for Goal Setting

Use positive language when setting goals – for example “achieve a minimum of 80% in this exam” is a much better goal compared to “do not fail the exam”

Be precise – set precise goals, use dates, times, amounts where possible so you can measure your achievement. Doing it this way you will know exactly when you have achieved the goal and you can be satisfied upon completion.

Set Priorities – Sometimes having a multitude of goals can be overwhelming. Have a look at your list of goals and prioritise which goals are the most important to you so that you can focus on achieving these first.

Write Goals Down – This is a simple step that gives you more accountability. If you do not write it down, you could easily forget it in the future. Write it down and regularly look back at it and make sure you are on track.

Keep Goals Realistic – Do not set goals that are not going to be realistically achievable. This will only leave you disappointed if you do not achieve them. Only you know your own limitations, so do not exceed them into the realm of impossibilities.

Keep Goals Difficult – Conversely to the above, make sure there is a challenge to achieving the goal. Do not set a goal that is too easy just for the sake of it. The point of goal setting is to push yourself a bit to achieve something. If you set a goal that would have happened anyway, it does not show any growth or development in you as a person.

Set Short Term Goals

Setting short-term goals is important for a variety of reasons. Firstly, it gets you into the habit of working towards a goal, and focusing on achieving it, without having to focus for several years to achieve the end result. Also, by ticking off these short-term goals, it gives you the gratification and motivation to keep working towards your medium and long-term goals.

If your short-term goals are related to your long-term goal, ensure it is relevant and practical to what you ware looking to achieve.

For example, our long-term goal from before:

“I want to reach my FIRE Number of $1,250,000 by January 2027”

So, you can have a short-term goal as a step towards this long-term goal:

“Achieve a net asset value of $950,000 by January 2022”

You can break down your long-term goal into a series of short-term goals, and this way you will have reached your long-term goal before you know it!

Reach net asset value of $950,000 by January 2022
Reach net asset value of $1,000,000 by January 2023
Reach net asset value of $1,060,000 by January 2024
Reach net asset value of $1,120,000 by January 2025
Reach net asset value of $1,185,000 by January 2026
Reach FIRE Number of $1,250,000 by January 2027!

Achieving Goals

Once you have achieved a goal, take the time to enjoy the satisfaction of a job well done. Think about the implications of this achievement, and also have a look at progress you have made towards other goals.

If it was a significant goal, then why not reward yourself appropriately. After all, you have deserved it.

With the experience of having achieved this goal, review the rest of your goals and assess the following:

Did you achieve the goal too easily? Maybe you should make the next one harder.
Conversely, did the goal take too long to achieve? Maybe you should make it a bit easier next time.
Did you learn anything from achieving this goal that will change other goals?
Maybe you learnt something about yourself while achieving this goal that might require another goal.

Summary of my Current FIRE Goals

Short-Term Goals

Reduce total Mortgage to $400,000 by 31^st December 2021
Increase Share Portfolio to $200,000 by 31^st December 2021
Increase Net Worth to $950,000 by 31^st December 2021
Increase Superannuation to $130,000 by 31^st December 2021
Achieve Net Passive Rental Income of $7,500 by 31^st December 2021
Obtain a minimum Savings Rate of 35% for the year 2021

These are all my financial goals for 2021, and for the most part they are within my control. However, it should be noted that some of them are out of my control. If there was a stock market or housing crash, then my share portfolio, net worth and superannuation balance may not reach these targets. I am aware of this, and if this does happen and I do not meet my goals it would be frustrating, but I would not be to upset. My main ones that I want to be able to achieve would be maintaining a savings rate of 35% throughout the year, that one is the most within my control and if I am able to maintain that goal then I would be satisfied.

Medium-Term Goal

Achieve Net Worth of $1,000,000 by December 31^st 2022
Purchase future retirement home by June 30^th 2022

Long Term Goal

Sell Investment Properties by January 2025
Reach FIRE Number of $1,250,000 by January 2027

I prefer to keep the majority of my goals in the short-term, mainly because there are a lot of changes in my life that can occur over the next couple of years that I like to really only focus on setting goals over the next 12 months. A lot of my medium- and long-term goals are flexible to change depending on changes in my life. I think this is important to keep in mind, sometimes there are external forces that may prevent you from achieving your goals, you can not let this get you down and it is important to understand that it is important to just focus on what is within your control and do the best you can.

Conclusion

Goals can be helpful tools for us to reach our dreams of FIRE. But it is not necessarily everything. In a future post I will cover how the pursuit of mastery might be more practical in terms of achievements compared to setting goals.