Whether you enjoy creating New Year’s resolutions or not, there’s no denying that the start of a new year is an excellent time to pause and evaluate certain aspects of your life. 

In particular, you can use this opportunity to think strategically about your goals and the ways you can make progress toward achieving them in the next 12 months. 

But do you actually know how to set effective goals? It seems simple, but many people struggle with this foundational task, especially when it comes to their finances. And whether or not you set goals well will have an impact on your ability to make them a reality.

So, here are three important steps to help you set goals and then actually achieve them.

‍1. Determine Where You Want to Go

This step may seem obvious, but deciding on a specific destination you’re trying to reach is a vital step of effective goal setting. 

Avoid setting goals like “invest more” or “save more money.” Not only are these concepts too vague, but they’re also not tied to a specific end result. And if you’re not in touch with the “why” behind your goals, it’ll be harder to find the motivation and discipline needed to turn them into reality. 

A more specific destination could be, “I want to have the option to leave my 9-5 in the next three years,” or, “I want to generate x amount of dollars in monthly passive income throughout my retirement.” 

Once you’ve chosen a specific destination you’re trying to reach, it’s much easier to set up a concrete plan for how you’re going to get there. 

2. Determine the Steps, People, and Resources You’ll Need to Reach Your Destination

Setting specific goals is important, but many people make the mistake of stopping the process there. If you want to reach a certain destination, you need to break it down into actionable steps.

I often use the analogy of travel to talk about investments and goal setting. If you’re planning a trip to Hawaii, you wouldn’t just hop on the first plane that shows up at the airport. Doing so might get you somewhere, but probably not to the place you’re trying to go. 

Instead, you’d map out your journey step by step. How will you get to the airport? What plane will you take, and will you then need to take a boat or a car to get to your hotel? What will you pack in your suitcase to make sure you’re best equipped to enjoy the trip? 

Answering these questions is a vital part of planning any trip, and the same is true for investing. If, for example, your goal is to make your 9-5 optional, you should break that goal down into smaller steps by working backwards from your destination. 

You might start by saying, “To leave my job, I’d need to generate x dollars in passive income each month.” 

Then, “To generate x dollars in passive income each month, I need to invest x dollars at an x% rate of return.”

Then, “To find investments that generate passive income, I need to work with a trusted financial advisor.” 

This thought exercise will help you determine the specific knowledge, team members, and other resources you’ll need to achieve your goal.  

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3. Find Your Opportunities

Once you’ve identified your goals, created a detailed plan for achieving them, and surrounded yourself with a team of people who can help you, it’ll be much easier to find the specific investment opportunities that align with your goals. 

The type of asset you invest in — whether that’s real estate, ATMs or storage units — matters much less than most people realize. The important things to focus on are the investment timeframe, tax implications, and expected returns. 

And the more they understand your goals, the better your advisors can help you find opportunities that make sense for you. 

If you’re an Accredited Investor who believes improving your tax efficiency through direct investments will help you reach your goals in 2023, our team at First Generation Capital Partners would love to partner with you. Simply fill out this brief form to contact us today and start learning more.