Goals give our lives direction. After all, if you don’t know where to score, how can you expect to?
We often live our lives without a clear purpose. We don’t have a clear direction of where we want to go. That’s why goal setting is so important.
But many people fail to achieve their goals because they don’t have a clear description of what that goal is.
You need a clear goal!
You should be very specific when setting goals, especially when it comes to achieving financial freedom.
So, how do you do that? And how do you know when you are financially free?
To reach your goal of financial freedom, you must have a number. I did it in my own life.
I calculated my expenses at that moment. I calculated how much that would be in the future.
I put in calculations of when I wanted to have a big house and a nice car. My favorite car was a Tesla Model S at the time.
I looked up the exact cost of my dream house and car. I looked up how much it costs to maintain a family with four kids.
Write you financial goal numbers somewhere
It was a long exercise, but I did everything. I made an Excel sheet. It showed all my expenses and then my future expenses.
That whole list gave me so much clarity because then I could twist that number.
If I knew what my expenses would be, then I knew how much passive income I needed to generate.
If that number was $50,000 a year, I would add 5% to it because that’s how much investments would yield in return.
Then my goal would be either $50,000 in passive income or $1 million in assets that generate a 5% return.
When I got that number, it started to become real.
It also started to become something I could achieve. And I could see why I would achieve that.
Oftentimes, I hear people say they want to get $10 million or $1 billion. But they don’t have a vision of the lifestyle they want.
If you want to have a private jet or a yacht, those numbers will be reasonable. But most people don’t need that much money.
Even if you want that private jet, ask yourself: where do you go? How much does it cost?
It’s probably not even that expensive. You don’t need $1 billion for that.
Quantify that number, and then you can work towards it.
There are two ways to achieve your financial goal.
You either generate enough passive income from your business or have enough assets.
Then you put that money into something that generates passive income, like stocks, real estate, or other investments.
When I started working on myself and my goals, I started to slowly get further in life. I could see everything I was doing at that point.
With every business venture I was going into, I could see my balance grow. I got closer to my goal.
It taught me to be more motivated.
I had set different targets. I set a passive income for my financial target, independence, and then freedom. So, there are different levels.
Independence was my basic level. And achieving that was super easy. All it took was less than $1 million, and I was already retired.
Many people have these huge numbers, and you probably don’t even need that much.
The number might even be much smaller for you. So, do that exercise.
Find out what is your number.
There’s no reason to set a goal so high that you feel discouraged to pursue it because you fear it’s too impossible.
I’m all for making goals big because they must motivate you. But if it’s too big, you’re probably not going to do it.
You need to find the right balance in making goals attainable but still aspirational.
This way, you’ll get motivated. You’ll get creative, so you’ll use different parts of your brain.
If you calculate exactly what you need, you can see why you do what you do. And that’s so important.
That’s how you retire early.