The 12 Steps – Step 7 – Setting Goals

In the last post The 12 Steps – Steps 5 & 6 – Building A Foundation we covered how to dig yourself out of debt by prioritising high-interest debt first. Then we talked about building a safety net of savings to cover unexpected expenses. With those important steps behind us… it’s time to refocus our sights and move 100% into wealth building mode. But there’s one thing we have to do first…

Step 7 – Set BIG Goals

Goal setting is absolutely crucial to success in just about every endeavour, so much so that a whole area of management science has grown up around it. Anyone who has taken part in a work performance program is probably familiar with the process of goal-setting and reviews. To be successful, you should have two types of goal for your finances. The first type are those ‘big picture’ goals that motivate you to stick with the process over time, and are linked to emotional / lifestyle benefits. Examples of these top-level goals might be ‘free myself from debt’, ‘retire by 40’ or ‘achieve financial independence’. These are hugely powerful as a longterm driver for your discipline and focus. However, in isolation, they tend to lead to failure. People who start each new year with a goal to ‘lose weight and be fitter’ are statistically more likely to fail than people who set a goal ‘to lose 3 Kilos by 30th June’. For goals to be effective we talk about making them SMART – which for the purposes of this exercise stands for:






In A Return to the 12 Steps – Steps 3 & 4 we built the platform for proper goal setting by creating a tracker to measure net worth. Armed with all the numbers on your current financial situation, you should be able to create targets for the coming 12 months that are challenging but absolutely achievable. Let’s say, for the sake of this exercise, that your salary is DHS 30k per month and you have just finished paying down your debt so your net worth is zero. You might build your 2019 goals something like this:

  1. Save half my salary every month in 2019. (Spend 15k / Save 15k).
  2. Complete my emergency savings fund of 3 months salary (90k) by 30/06/19.
  3. Research and open a suitable offshore investment account by Sept 2019.
  4. Invest DHS 90k by 31/12/19 in low cost index trackers.
  5. So Net Worth goal for 31/12/19 should be DHS 180k by 31/12/19

If these goals seem totally out of reach, adjust the numbers to something that you are more comfortable with… but don’t forget that they are supposed to challenge you. If you manage to hit all of your goals, all of the time… it may be that you need to ramp up the difficulty. It’s OK to fail if you push yourself hard. If you do find that you are over-achieving on your savings targets part way through the year, revisit your goals and set higher targets. Also, feel free to add new goals throughout the year but make sure to keep track of them all. I use the Notes function on my iPhone and have a 2018 goals note which I can pull up to remind myself what I have to do. Going into December I just have my net-worth target left to hit… it’s going to be touch and go whether I make it… but I think that’s a sign that I set a challenging but achievable number in the first place.

New Year’s Day 2019 is just around the corner and a new year is a great opportunity to set new goals and review your performance against existing ones. But if you’re doing these steps for the first time, don’t wait until then… set yourself a savings or debt repayment goal for 31st December this year and then challenge yourself to beat it!

With our Big Hairy Ambitious Goals in place, it’s time to start investing. I had intended to cover that in this post but as there is so much to cover, I have split it into a separate post that will follow very quickly.

Next Post – Step 8 – Invest – Pay Yourself First


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