Welcome to Finance and Fury

Welcome to the new year, depending on when you listen it may be new year’s eve or the new year 

  1. Hope you are in for a good night, or not recovering from one.
  2. Starting off with a question; looking back on the year, are you in a better or worse financial position?
  3. If not, never fear because today’s episode we will look at how to be in a better financial position (and what that really means) this time next year, and importantly how to implement some action plans to make sure you’re always moving forward.
    • Plus I will share with you my goals and the process on how I came to them
    • Help to illustrate my strategy, to help you put yours together and implement them

 

What are your financial goals for this year? Or new year resolutions?

  1. Maybe you haven’t thought about them yet. By the end of this episode you should be able to think of at least 3 and something to put in place
  2. Financial goals are related to ‘what you need money for’. Most will be related to other goals you have
    • Short term goals, this could be saving for a deposit on a home, getting out of debt, or saving for a holiday
    • Long term goals, these are mainly around financial independence, or things that take a long time to achieve like a passive income.

 

My Goals for 2019: Revolve around my longer-term goals

  1. Equation: Achieve many short-term goals to achieve the larger long-term goals. Which is from the underlying purpose. If you need help, some of the archived episodes from the “self-made millennial” podcast are worth listening to. Like how to come up with purposes and goals in further detail.
  2. My Long-term goal: it’s all around the concept of freedom, being able to do what I enjoy, and that’s helping people to become financially independent
    • My short-term goals do shift over time as I learn of new ways to achieve the long-term goals
      • Putting together courses, doing podcasts, advising, it’s all really what I enjoy doing
    • What limits this? Resources, really there are 2 forms of resources time and money, and money can buy time
      • Staff: You could pay someone to work full time while you do something else. E.g. $60k = 1,920 hours back to you
      • Frees up more time for development: making webtools, calculators, etc which all cost a decent amount to get up
    • A lot of my long term goals revolve around this one question: what can I do to improve other people’s lives and also be financially independent.
    • A by-product of this is reaching passive income needs. When 100% of your income is self-generated, you have the resources to achieve this goal, and detract from the first goal
  3. My financial goals went on pause for 18 months whilst setting up the business
    • Starting from no income, so no staff, to a few staff, getting a premise, my own license. This all takes money.

 

My process

  1. For me a financial goal isn’t set unless it has a yes answer to the following:
    • Will it put me in a better financial position? What does ‘better’ look like? It varies depending on the goals
  2. Simple measurements depending on your goal
    • Will it move you closer to your individual goals?
      • For my shorter term goals, will it help my team to expand to start achieving more. Will it help me get more done.
    • Will it move you closer to your financial independence target?
      • Target: Wealth to generate Income: E.g. $100k in passive income, you’ll need $2m today. Which is $2.9m in 15 years’ time.
      • If you are new to all of this, have a listen to previous episodes on how to work this out. This can be found on the podcast show notes.
  3. Will it close the gap (every year)? There are categories which most goals fall into which are either:
    • Building wealth: Investments and businesses
    • Increasing income: Salary, investments, and business
      • Break down further, like reducing taxes, reducing debts, etc. to increase income

 

My financial goals for this year

  1. Personal: Be financially independent by 40 (same goal as when I was 20) – Smaller goals for the year
    • Contributing to Super: around $10,000. I haven’t been able to for a while, with starting the business up. As cashflow went into expanding company.
      • Didn’t want to go into debt so I funded the business from savings and business cashflow
    • Hitting investment targets each month, which is similar reason to super I didn’t draw much out of the company
      • Increase monthly investments by $1,000. So a total of $1,500 pm, on top of the reinvestment of my existing investments
    • Podcast/Course: Not so much of financial goals
      • Have a second course done by the middle of the year
      • Podcast: Keep pumping out 3 eps a week
      • Get a few calculators I’ve built into webtools as a site resource

These are a quick summary of my goals.

What are your financial goals?

  1. Not many people stick to new year’s goals. There can be too many, normally people think this is good to have a lot of goals, however:
    • It’s hard to go from 0 to 100 overnight, it’s a lack of inertia. Something continues in its existing state (rest or in motion) unless it is changed by an external force
  2. Example: say you get 10 goals down now, and they are all new things
    • Invest in shares, reduce my tax, buy a property, generate $50k of income in 5 years from investments, etc. Where do you start? And how? Most of these will be using resources at the sacrifice of another.
    • Information overload sets in and you go back to your old ways pretty quickly. It is safe, familiar and easy
  3. If you are just starting out pick 3 goals for the year maximum. Are they short term or part of longer term goal?
    • How much do you need? By when? How are you going to do it?
    • Put it down for each goal that you have, the answers to those 3 questions. E.g. Save for a holiday: I need $5k in 12 months, so I’ll save $416pm

How to start?

  1. Starting small, and picking one thing. What is one financial behaviour you would change? Or what is the most important goal?
    • Future: This is where goals come back into it. What you want to achieve needs to be defined. Plus, is the goal going to help achieve this?
    • With the one goal, breaking it down in the simple SMART terms.
      • SMART – or What is it? How do we measure it? and why?
    • g. Previous Example: How will you save $416pm? Enough already? Or cut spending/increase income?
      • Plus consider if this will this hurt another goal?

 

Got your goal: Looking at implementing it  

  1. How do you motivate yourself to invest? Finding motivation is a rubbish concept as a place to start
  2. What people search for is a moment of inspiration to get the ball rolling, but, It never comes.
    • It’s because motivation comes from a positive feedback loop. You do something good, dopamine is released in the brain, you then want to do this again
    • Think about it, you don’t need to find the motivation to indulge in anything. Because your brain is wired to give positive feedback when you do these things you already like.
    • Part of the problem as bad things compound as well.
  3. Small action = dopamine = want to do larger actions.
  4. Motivation is a lie, there will always be something better to spend your money on than your future security and financial independence. Like things that achieve instant gratification

Implement it and adjust along the way. Over time (30 – 90 days depending on the goal) it will become a habit. Then implement the next goal on the list

How do you improve? One small thing at a time. That is the process of improvement.

  1. Financial habits are built through the positive feedback of cue, action, and reward.
  2. These decisions years ago have improved my position now.
  3. That is the relationship with good habits. Keep improving you slowly over time.
  4. Pareto distribution or 80/20 rule.
    • 20% who have 80%, they have been able to grow good habits, that have compounding effects
    • It is as simple as investing and waiting. $20k today would be $80k in 14 years at 10%

What is one thing that you can do to better the future self?

Starting sooner rather than later allows you to do a negotiation with your future. Think of it as time travelling.

 

Summary:

  1. What are your three financial goals? How much, by when, and how will you get it done?
    • Will your actions help achieve the goal? What strategies do you need to implement?

 

Thanks for listening everyone! I hope this episode helped break down some steps

Feel free to ask any questions. If you have a question, someone else probably does as well. Feel free to let me know if you have follow up questions over on the contact page on the website here.  

Episodes to check out!

What is financial independence?

From puzzle to map

Trusting yourself and learning the basics

What does your retirement look like, and why?

 

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