How to achieve your goals in 2015

And it's that time of year already.  This is the time you should start setting your goals for 2015.  Leave it any later and the holiday season and holiday mood will over-take you and you will get nothing done.  Leave it until next year and you're already behind the 8-ball.

I think when you set your goals you should make sure that

1. They are written down
2. They are achievable / realistic (but not too easy - they should be a challenge)
3. They have a set time frame
4. You have a plan to achieve these goals

Note that these don't only apply to financial goals - I talk about financial goals on this blog because that's what this blog is about but I do this for every goal I set for the year.  

Make sure you write your goals down

How many times have you made a new years resolution at a party on new years eve or perhaps the next day or week and then have forgotten about it?  Maybe it was to lose a few kg or perhaps it was to pay off some debt?

It's too easy to forget a goal and not hold yourself accountable if you don't write your goals down.  So write them down.  Start a blog if you want to and track your progress towards your goal (that's what I did with this blog!).  Or just keep it simple and write them on a piece of paper.  I wrote mine in a little notebook I keep on my desk.  For 2014 it had 8 goals (of which I managed to achieve 5 and get awfully close on 1).

Make your goals achievable...but challenging

Having achievable goals is

How to combine finances with your partner...a transitioned approach

A few months ago I asked whether there was a right way to combine finances with your partner.  I received some great tips both from the comments on the website and from some very detailed emails that people sent me.

What I realised was that everyone's situation was different and it completely depended on the couple involved.  In my original post I outlined some of the ways that couples combined their finances.  In this post I will talk about transitioning to such an arrangement - i.e. how do you combine finances with your partner smoothly.

How to combine finances with your partner in a smooth and trouble free manner

Some people are completely comfortable joining their finances together immediately.  I talked to plenty of people who didn't bother thinking about it too much - they just did it and worked it out along the way.  However largely these people seemed to either

• Be broke (or not have a lot) when they combined finances - combining nothing is quite easy to do!
• Regret not thinking about it more at the start - they were 'young and thought nothing could go wrong'

If you are thinking about combining finances when you're a bit older and if you're the type of person that thinks about things far too much (like I do) then mashing together two peoples financial lives straight away doesn't seem like the best idea.

Transitioning to joint finances has many advantages

There are several advantages of transitioning to joint finances instead of setting up one bank account and putting everything you have in there straight away.  These include:

1. Being able to see how your partner deals with money
• You will probably have a feel for this well before it comes to it however when you are actually sharing finances you will learn far more about how your partner thinks about and deals with money
• For example - I never thought my fiancée was bad with money however she never really seemed to save a lot and didn't have any sort of nest egg.  What I discovered when we started saving together was that as long as she had a goal and knew how much she had to save each pay check then she would save like a fiend!  It's not the way I operate with money but it gave me far more comfort in combining finances
  
2. Allows two people who come to a relationship with vastly different financial situations to have a 'mine', 'yours' and 'ours' bucket
• I have no doubt that eventually everything is going to fall into the 'ours' bucket...especially when I get married
• However in the interim I didn't feel comfortable lumping everything together straight away.  Perhaps I'm just a cautious person but I did prefer a slower integration
  
3. You don't feel 'trapped' too early
• A lot of people (including myself) valued the sense of freedom that came with being single.  This didn't mean that I don't want to be in a relationship...but if I have been saving for my sports car for a few years I don't want to have to have to run that by someone else (I saved for this!)
• Eventually your finances will probably be completely shared and then something frivolous like a sports car becomes a joint decision but early on it should still be yours and transitioning to combined finances helps with this!
  
4. Avoids some potential tax issues
• If you already have a share portfolio or other assets be careful about transferring title (even when you do get married)
• Often transferring title (even to a trust if you decide to set one up) will result in a capital gains event and will result in you having to pay tax even when you don't plan on selling the shares

A slow and progressive transitioning to combined finances is both natural...and it works

I found that slowly moving to more integrated finances is the best way to combine finances.  Below is an example of how you can slowly move to integrated finances:

1. Set up a joint account and pay shared bills out of that account if you live together  
• Work out roughly how much you need to spend each month in joint expenses and then each of you transfer an assigned amount into this account (it does not necessarily have to be half and half but it should be shared)
• Continue to pay your wage etc. into your own account...the point of this is to combine finances slowly
  

My Updated Wedding Savings Plan

Around Valentines Day this year I set out my plan to save for a ring and ultimately marriage.  I had heard how much marriage costs and I didn't want to have any sort of bill shock when the inevitable expenses actually came around so I decided to spread some of the expenditure associated with marriage.

My original plan called for $60,000 in total savings:

• $10,000 for the engagement ring and proposal
• $30,000 for the wedding itself
• $20,000 for the honeymoon

I'm glad to say that the first part is done and dusted.  I bought the engagement ring (for $10,000), got the GST back on the ring when I went overseas (-$909) and then spent about $1,500 on the proposal itself.  I was about $600 over budget but in the grand scheme of things I'm not too worried about that.

However, being proposed and being able to talk about the wedding with my fiancée has helped clarify what we want to spend and how much we're probably going to need for the wedding.

The new budget is $10,000 higher than the old budget...and the timeline is shorter

Spreading expenses over a particular time requires you to know 2 variables:

1. How much are you going to spend?
2. When are you going to need to spend it?

I had originally forecast $30,000 for an August wedding in 2015 however once my fiancée and I sat down and did the numbers we realised that we would probably need to spend more and save it in less time.

The wedding is going to be ~$10,000 more than I originally forecast...

The wedding is going to be more expensive than I originally forecast for 2 reasons

1. I under-estimated how many people we had to invite.
• I originally did the calculations on a wedding for ~120 people however when we actually listed how many people we wanted to invite the list turned out to be more like 150
2. There are some significant costs I didn't originally think about
• When I first budgeted for the wedding I thought about the costs that most people incur such as the reception, outfits, church, flowers etc. etc. and I gained these lists of expenses from online forums and calculators
• However there are some costs which you will incur that are specific to your wedding.  In our case we are going to have to pay for the flights and accommodation of some very close family members that we want to be at the wedding but who genuinely can't afford to be there if we didn't help them out.  I am more than happy to spend this money but it does add up very quickly

...and is also likely to be a month earlier than forecast

I had originally forecast an August wedding and had set my savings plan up accordingly.  However when we worked out when we actually wanted to get married we realised that we were actually looking at early July (due to my work commitments in August).

This effectively reduced our time to save for the wedding by 2 months.  This may not seem like a bit reduction however a few factors meant that it has having a far larger impact than I first imagined:

• I had originally structured my savings plan so that I was paying more the closer I got to the wedding
• Originally I was paying

My sports car dilemma....

I have been talking about buying a sports car for years.  I have mentioned to everybody...my friends my family and I have talked about it on this blog more times than I can imagine.

I have the cash to spend on my sports car...

At the start of this year I committed to buying it as part of my financial plan and budget.  There were some hiccups along the way...the fact that I was running over budget on a lot of my other planned expenditures made me realise that I would have to compromise on the amount I had to spend.  However recently there was some good news on that front:

• I spent far less than I had originally budgeted on my South American holiday
• I got my bonus figures a few days ago and it was significantly better than what I was expecting

The excess cash from these two factors should cover the 'over-spend' on other items throughout the year which leaves me free to spend my original budget on my sports car.

...but here's the hitch...

I can't work out what

The single easiest way to get ahead financially when you are young...

If you are finishing up your college or university degree or have just started working you may be looking at ways to invest your new hard earned cash so that you can get ahead financially and can afford the nicer things in life.  There are a million options and as many tips out there on how to do this.

Well I think there is one thing that you can do which will make more of a difference than almost anything else and it is incredibly easy to do.  So what is this wonder solution?  It's really simple:

Stay at home for as long as you can...

Staying at home for longer is the best single financial decision that you can make when you are starting out on your wealth building path.  There are many reasons for this including

1. You avoid the high costs of rent

Rent is a massive expense and even if you share can really eat into the amount of money that you can save.  Now I'm not advocating mooching off your parents.  Pay them some sort of rent every month if they will take it or contribute to

Fire your accountant and do your own taxes

I'm firing my accountant and doing my own taxes this year.  I have written before about the dilemma regarding whether to use an accountant to do your taxes.  For the last 2 years I have had an accountant do my taxes for me.  It provided a safety blanket however it had downsides as well such as

1. Having to take time off to go and see the accountant
2. Having them take longer to do the taxes than I would myself

I have therefore decided to do my own taxes from this point forward

The more I thought about it, the more I realised that people like me should really be doing their own taxes.

You should do your own taxes if...

...You completely understand your own financial situation

If you completely understand your own financial situation or are looking to really take control of your financial situation then you should really consider doing your own taxes.  Unless you have companies embedded within trusts and a lot of complicated structures set up it is quite easy to do your taxes yourself.

In Australia the Australian Tax Office makes it quite easy to do this.  They give you a program which helps you work your way through your taxes and the guides on their websites are reasonably simple and easy to understand.  I don't know what other countries' systems are like but if it is anything like Australia you really should be able to work it out.

If you really have no idea

Value Your Time: The Case for Outsourcing

A few weeks ago I wrote a review of The 4-Hour Workweek (see my review here).  That book had several themes but one of the main ideas was that you can free up your time by admitting that it has a value.  When your time has a value then you can work out whether you can outsource activities or chores which eat into your free time.

The focus of this post will be on encouraging you to think about how you value your time and how you can free it up by outsourcing.

Your time IS valuable

The thing you should always remember is that your time is valuable.  Most people (especially those of us who are focused on saving and budgeting) often forget this.  We often find ways to save money by doing things ourselves however we forget that the time we spend doing various tasks could be spent doing something that we actually want to do.

An easy way to value your time is to work to answer the following question:

"If I could buy an hour (or a day) away from my job...and still get paid - how much would I pay for this time?"

If you are willing to pay $20 for an hour off at work then you should value your time at $20 per hour.  Obviously the more you earn, the more you would be willing to pay for that extra hour off.

As savers we are conditioned not to 'waste' money.  If your

Want to get more done in each hour? How to work smarter not longer

In a recent post I talked about how I managed to increase my productivity at work 300% by getting rid of time wasters and distractions that take away from the core tasks at hand.  I didn't tell the full story in that post though.  I was getting 4 times as much done...but I wasn't using all those hours that I freed up during the day for work.

In fact I managed to get four times as much work done in almost every single work day (excluding days which are just out of your control...we all have them) while freeing up two of those hours to work on personal projects (including this blog and spending more time on personal investments).

You can achieve huge productivity gains by knowing when you are effective

Most of us do not work in jobs where we can work when we are at our peak efficiency and then watch TV or relax or do something else that we would like to do when we are not.  This is especially true if you work in a typical office job which has a set expectation of the hours you will work.

All of us know when we are the most effective...although you may not have stopped to think about it

So much of being able to get these productivity gains is knowing when you are effective.  One of the easiest ways to think about this is to think about when you get a lot done during the day.  For me I get the most done before lunchtime and then in the last hour before I leave work.  Everyone is different but I don't know a lot of people who really hit their straps right after they have eaten lunch.

When are you at your most efficient?  Does it take a while for your brain to 'wake up' at work or do you just get right into it?  Working this out can help you become much more efficient.

Save your most important tasks for the times you are most efficient

In my last post on becoming more efficient I talked about identifying what you actually needed to do each day and what was not as important or just filler.  If you combine this with

I increased my productivity 300%...and you can too

Do you find yourself constantly busy or working longer and longer hours and not having enough time in each day to do what you want to do?  It was certainly a feeling that I had.  It seemed like no matter how hard I tried at work, I was always behind where I wanted to be and my hours were starting to stretch as a result.

I  wrote a book review on the 4 Hour Workweek recently (see my full review here) and these are some of tips contained in that book which I put into place.  When I implemented the strategy below I found myself being roughly ~3 times more efficient

Identify your time wasters

The first thing you need to do is to identify what you waste time on.  What you waste time doing is completely different to what I waste time doing.  When I say waste time I'm not only talking about wasting time on Facebook (although that counts too!).   There are both obvious and not so obvious ways that we all waste time

Obvious time wasters

These time wasters are some that we know are 'naughty' and that waste time however we often view them as taking a few minutes out of each day and not really contributing that much to our inefficiency.  Examples can include

• Spending time on Facebook
• Playing games on your phone
• Chatting to people in the office about your social life
• Watching a YouTube video that someone forwards to you
• Getting a coffee with someone and sitting down for 'a quick chat'

Add up how much time you spend on each of these and other obvious time wasters and you will be amazed at how much of your day goes on these things which you know are bad.  Minimising office banter and conversation alone saved me ~1 hour every day.  If you think that this makes the office 'more fun' just think about whether you'd rather office banter or an earlier time to leave the office...easy decision in my books.

The time wasters which we use to feel efficient

These are the most insidious types of time wasters because we feel like we are being efficient and are doing something.  However they make

Book Review.The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss

This book genuinely changed my life.  I re-defined my goals, increased my productivity at work 300% and am now doing a lot more things that I love to do.

I confess that I hadn't read the 4-Hour Workweek until recently because I had always assumed it was one of those 'get rich quick and have the perfect life with no effort' type of books that always seem to make the best seller list because it is selling a dream that is largely unachievable.  A classic example of a book like this is Rich Dad Poor Dad (see my full review here).

I only really read the 4-Hour Workweek because my business plans had stalled and my girlfriend mentioned that it was an incredibly good book.  I promptly bought the book and hated the first few chapters.  However I had promised her that I would read the book and actually complete the questions at the end of each chapter so I thought I would plod through it and then write a review about how much I hated it.

As it turned out...I had to eat my words because this book was one of the few that has actually changed the way I live my life.  If I think back to all the books I've read, there are few which had such an immediate impact.  I know that's a big call but this is what the book did for me

1. It made me sit down and outline my goals in a way I hadn't thought of before
• It made me list what

What have you done to change the world recently...?

If you are a reader of this blog the chances are that wealth creation, finance, investment banking, real estate or something else to do with money is what you are interested in.  I am completely in that camp as well and working in finance and writing about finance all day long often has me wrapped up in a bubble that I rarely step outside of.

Occasionally I decide to stick my head outside this bubble...

I stop thinking about capital generation, wealth preservation and the enjoyment of life that comes from that (i.e. holidays, a nice apartment, dinners etc) and start thinking about other things in the world around me.  Invariably this takes me down two paths: I either think about politics or I think about charity.

When I think about politics I almost always end up depressed and disenchanted.  The people with the most ability to affect change in our world seem focused on their own goals and interests and caught up in their own 'bubble'.  This is not always true and occasionally you'll see something really great come out of politicians.  But for the most part we seem to be disappointed with the lack of progress that we desire.

The other path I take thinks about the difference that each and every one of us can

Money and relationships: Communication, Communication, Communication

When I was a bit younger I confess that communicating about money was the last thing I did in a relationship.  It didn't feel like one of the important things you needed to focus on.  It was not that I was 'the shallow guy' - looks weren't the things I focused on - I focused on how nice the girl was, how she treated me and how she treated others (you know those soft things you're told that you should focus on) but I never really talked about money.

As I'm getting closer to proposing to my girlfriend and settling down and getting married and all the expenses that come with that I have started communicating more...and I've realised just how important it is to get on the same page.  It's not that my girlfriend and I had vastly different expectations about our financial life - to the contrary - we were more alike than I first imagined but communicating allows you to to work together towards your financial future.

Some of the advice below I have muddled my way through and worked it out on my own while others is a compilation of advice from my older (and wiser) couples who have a great working relationship when it comes to finances.

Why is communicating about money important?

There are several reasons why communicating in an easy and open way about money is important:

1. It means that there are no mismatched expectations
• When yours and your partners expectations are not met financially it can lead to a lot of tension
• If you are the saver for later in life and to set you up and you partner is living in the moment and spending you can feel like you are bearing the weight all on your own while they can feel like you're a miser and holding them back
• Communication and compromise is the key - work out what you're willing to compromise on and make it work.  
2. You can help each other achieve your goals
• You may actually be surprised when your goals line up pretty well with you partner's even when you didn't expect it to
• I have been wanting to start a small business for a long time and after chatting to my partner about it recently I found out that it is something she has thought about doing for a long time too and we are now actively working on something together
• My partner is not at all interested in finance - I can see a little part of her die whenever I start talking about it - so I extended that assumption to small business as well but I couldn't have been further from the truth
3. It can bring you closer together
• A natural part of discussing finances is discussing goals and objectives - when these become share goals or shared objectives it can bring you that much closer together

There are many more reasons that talking about money is important but the ones above are the ones that really stood out to me.  If the older (and more experienced) readers of this blog would be willing to add more advice for the less experienced readers (like myself) that would be much appreciated!

...But how do I bring up the topic of money with my partner?

Starting the conversation is often the hardest thing.  This is the way that I had recommended to me and it is also the way that I started talking about money with my girlfriend:

1. Start the conversation about life goals and plans
• It is really really hard to start talking about money straight off the bat
• Most often, money is just a means to an

Whose priorities matter when corporations donate large amounts of cash?

Yesterday Westpac Banking Corporation (ASX: WBC) announced that it was donating $100 million towards setting up an IT educational scholarship which addresses the lack of females in the IT industry [Edit: The focus of the foundation appears to be much more broad than the news reports originally suggested - I actually support much of what they are doing personally but my comments about the agency problem identified in this article still stand].   As you can see from the attached article, the press loves feel good stories like this and it is almost reputational suicide to publicly stand against a move.

However I am against the very concept of donations such as this.  This is not because I am against donating to charity - indeed I support several charities and micro finance organisations including The Cancer Council, Kiva, Catholic Mission and the Fred Hollows Foundation.  I think charitable donations are a great way to benefit society and save tax at the same time.

The role of corporations is to act in the best interests of their stakeholders

The board and management team of a corporation are charged with acting in the best interests of their stakeholders.  Although some define the stakeholders quite narrowly - i.e. only shareholders - I have a more broad view and believe that corporations should act in the best interests of all of their stakeholders - i.e. shareholders, employees and customers.

Therefore, unless an action is in the best interests of the stakeholders of the company - i.e. the shareholders, employees or customers then it is not their role to donate this cash.

If we use the Westpac example above:

• This is clearly not in the interests of shareholders
• They are giving away a huge amount of money for no tangible benefit to shareholders
• Corporations often argue a fluffy point about goodwill but this is not measurable and is fast forgotten
• It should always be remembered that this is the shareholders money that is being given away
• They are not acting in the interests of employees
• Employees are not the ones getting the scholarships nor does the employee base benefit from these scholarships
• They are not acting in the interest of customers
• It is a really long bow to stretch to suggest that the promotion of education benefits customers
• As a side note I actually found it incredibly difficult to argue against this setting up of this foundation because I admire so much of what it actually stands for and is trying to promote

Some people make the compelling argument that corporations are the only actors which can bring enough clout to an issue to make a difference.  In the modern world they control the largest pools of capital and these pools of capital can be brought to bear in a way that makes a difference.  Whilst this is true there is a massive agency problem that happens - in this world of limited resources and unlimited problems, who determines where the corporations donate their shareholders' cash.

Corporate donations further the interest of management teams...not shareholders

If you look at corporate donations and the charities they donate to - it is invariable the charity that the CEO or Chairman support.  They have a project that they believe is worthwhile and they use their power as the head of a large organisation to further their own

Keeping it Professional: Your colleagues are not your friends

One of the biggest problems that young people have (especially young professionals) is how to 'get along' or be friends with others at work but at the same time maintain the level of professionalism that you require in the workforce.  This is something that all young professionals should think about but rarely do.

Why do people have trouble distinguishing between friends and colleagues?

One of the biggest reasons that people find it hard to distinguish between friends and colleagues (especially when they are first starting out) is because, for most people, in their previous educational careers, your friends are largely drawn from the group you spend most of your time with.  Think about your friends - where did most of them come from?  The chances are they were from high school or university.

We are used to the idea that we become close friends with and socialise with those we spend the most time with.  We then enter the workforce

Saving for Marriage: My Plan

I mentioned at the start of this year that one of the things that I wanted to do this year was get engaged. The more I thought about this, the more I realised how much of both a life and financial decision it was.  Not only are the implications significant for the rest of my life - but also in the very near term.

The whole proposition is crazily expensive...

Weddings and the lead up to marriage is a ridiculously expensive process.  Ignoring the cost of the ring there is also the wedding itself, the honeymoon, an engagement party and who knows what else there is to come! Unfortunately so much of this is tradition and is expected - I am a little bit of a traditionalist in this sense so unfortunately I think I am up for a lot of these expenses.

...so I made sure I had a plan

I foresaw a lot of these expenses when I was thinking about my budget for the year (and for next year as well).  Unfortunately neither my girlfriend or I come from families that are very well off so I can't imagine getting much financial support from either set of parents so we will be funding the wedding ourselves.  My girlfriend doesn't earn spectacularly well either so a large part of the financial responsibility for this event will be mine.

The only reason I disclose the above is so when you are thinking about planning a wedding / engagement yourself you really think about how you will fund it.  If you have parents who are willing to fund everything then you really have very little to worry about...but if you partner doesn't work or you are both on low incomes...perhaps you should start thinking about how you do it sooner rather than later.

How much am I budgeting for my wedding?

My weddings savings plan is basically in 2 parts:

• Cash that I need to save for expenses this year; and
• Cash that will be used in the future

In the first category will go the ring, the proposal itself and any engagement party.  I have set a hard budget on this cost - I will not be spending more than $10,000 on

Keeping it Professional: Emails and Instant Messaging

This post is sponsored by Grammarly.  Use Grammarly's plagiarism checker because citing the site, great grammar and superior spelling will help you avoid terrible alliteration and obvious clichés.

This post is specifically target at anyone in my generation (Gen Y) but can be applied across the board.  Email, instant messaging, texting and other forms of instant communication mean that we are ever more connected to our friends and our family.  However they are also now used frequently in business dealings.  I don't know a single person that doesn't use email for business and most large organisations now use some sort of instant office communicator for meetings and other communications.

The problem arises when we do not separate the way in which we use instant communications for our personal dealings and instant communications for our business dealings.

You should not be less formal just because you are using email or instant messaging

The temptation to shoot of a quick email without any of the 'niceties' that we would associate with letter writing or even if we were giving another person a call can be very tempting.  After all 'it's just an email'.  But in the business context you should always strive for a business tone when sending any form of communication - not only does it reflect on the company you work for (when you are dealing with clients) but it more importantly reflects on you in both an internal and external sense.

This does not mean you need to be overly formal...but avoid communicating like you would with your friends

I am not suggesting that you become overly formal in your business dealings - especially if you are sending an internal email to someone else in your office.  You can keep the tone and level of familiarity relevant to the situation but avoid communicating in ways you would with your friends

• Do not use abbreviations
• I use abbreviations all the time when I am communicating with my friends - I started writing a list of the ones I use commonly but then realised it made me look like a teenager but you get the general idea
• Never use them in

How much SHOULD you pay in rent?

I have mention in several posts recently that I have moved into an apartment on my own recently.  I decided to continue renting instead of buying as I wanted to save up a larger deposit for my own home as well as the fact that I have several big life goals that I want to achieve later this year.  This post will cover what I thought about when I was thinking about how much I wanted to spend on rent and what you should think about if you are looking into it.

The question is what SHOULD I spend on rent? NOT what CAN I afford?

When most people think about renting a place they think about what they can afford to get.  While it is important to live within your means I think it is much better to think about what type of place you want first and then look at how much it costs to get a place like that.

The problem with looking at what you can afford is that we are all maximisers.  I don't know anyone that would choose a place for $300 per week when their budget is $350 per week because in most cases the $350 place is much much better than the $300 place.

I have outlined a process below that I went through (and that you can follow) to work out what you should be paying in rent.

Step 1: Make a list of what you need and want in your home

Every one of us has different things that we need and want in our own home.  I was very focused on space and entertaining while the newness of the place was much more important to me.  If my girlfriend was choosing the place it would be a place which was smaller but where all the fixtures, fittings and appliances were new.

Work out what is important to you and then make a list of everything you want.  I decided that I wanted a 2 bedroom place - I hated en-suite only bathrooms (which typically come with one bedroom places) and I also wanted to have people over regularly so wanted to extra space that came with a 2 bedroom place.  I also drive so a car park was a must.  I needed to be close to the station because I catch the train into work every day.

Making this list of needs and wants helps focus you mind and will stop you maximising when you are hunting for a rental property.

Step 2: Work out what you can afford

I know I said that the question above should be what SHOULD you spend not what can you afford but it is important to keep your expectations in check.  If what you need and want far exceeds what you can afford then you need to trim back on your expectations.

Also - your rent should never

2014 Financial Goals

I have been mulling over my financial goals for this year for quite a while.  When I first wrote my post about thinking about your financial goals for 2014 I thought I would have my goals set well in advance of the new year.

What ended up happening was that I really sat down with my pen and paper and started thinking about what I wanted from my life and from my finances.  I have written about how your financial goals and life goals are inherently intertwined.  I also wrote about how I keep putting off my personal gratification in order to achieve a better savings outcome.  I am lucky enough to have saved a lot over the last few years and this year I decided to take a different approach.

2014 will be unconventional for me...savings / investments will stay flat and I will do everything I wanted to do

I probably signalled in my post on not putting off your gratification for too long that I was thinking about doing things I had been meaning to do for a while.  At the same time I hate taking money out of savings.

I came to the decision, therefore, that in 2014 I would save very little but I would achieve everything that I had been putting off and that I wanted to do but which cost significant sums of money.  I will not dip into my savings to achieve this, but rather will spend what I earn and continue to invest the investable assets that I currently own (which are getting up around $300,000 so there is a fair amount I can do without saving more from my wage).

My expenditure tracker is changing to reflect these changed goals

Anyone reading this blog would have seen the format of my expenditure tracker - I track how much I save into shares, into my offset account and into personal expenditure.  Because this year so much of my expenditure will be in personal expenditure, I decided to split this into several different categories in order to better track and control my personal expenditures.

This was a useful exercise in itself because it forced me to think about how much I actually spend on different things.  Some of the spending categories really surprised me.

What are these 'big goals'?

Normally I don't put much about my

Delayed gratification is great...but can we take it too far?

Delayed gratification for a greater reward is something we all learn as children.  In fact, my parents used to explicitly teach it with chocolates and other rewards.  The concept of delaying reward or gratification for a better outcome is one that has been taught as a virtue for many years and we all know the benefits of it.

In our financial lives the benefits are obvious - if you save more before you buy a house, the burden of loan repayments for a similar property will be much less...or you can buy a bigger house. You can extend this type of analogy to almost any financial transaction.

But can we take delayed gratification too far?

If we are particularly good at delayed gratification we are probably better savers than we are spenders.  I recently wrote a post on the difference and how to tell which one you are.  This is not necessarily a problem but I think it can be taken too far.

With financial matters delayed gratification can be taken too far because the payoff from tomorrow will almost always be greater than the payoff today.  Does this mean that we continue to delay our gratification until we are old or unable to really enjoy the fruits of our labour?

I am particularly good at delayed gratification - if I can see a bigger payoff (especially financially) from not spending money today then it will go under lock and key.  However this means that I often set a financial goal (spending wise) that I am then delay further.  An of this was my purchase of a sports car.  I went back and had a read through my posts and I first mentioned my sports car in my 2012 financial goals...almost exactly 2 years ago.  For one reason or another I have continued to delay this purchase.

I have been thinking about my 2014 financial goals and once again looked at putting off my purchase of a sports car.  This time I was thinking of

Start thinking about your 2014 Financial Goals

With only 3 weeks to go until the end of the year it is once again time to start thinking about your goals for the next financial year.  Although this is a finance blog and I will be putting up my financial goals, it is a great time of the year to be thinking about all of your life goals for the year.

Last year, around this time, I put up a post on how to set goals for the upcoming year and this post is going to be much of the same.  However, this year I will focus much more on what you should be thinking about when it comes to your financial goals.

It is very hard to separate your financial goals from your life goals

Trying to set financial goals without thinking about what you want for the rest of your life is pretty pointless.  Not only are you unlikely to set good goals, if your life goals involve some pretty big expenditures, your financial goals should reflect this and should aid in the achievement of this goals.

In fact, I think the first thing you need to do is to sort out exactly what life goals you want to achieve in the coming year and then set your financial goals after this.  For example

• If you want to get engaged this year (as many of my peer group do), you will need to buy a ring.  This should then feed into your financial goals.  For example - I want to get engaged in June, and I want to pay for the ring in cash so that my savings are not affected so I will need to save $5,000 / 6 = $833 per month
• If you want to go on an expensive holiday you will need to pay for this - do the same as the ring example above - set a time frame and savings objective and this will lead to a financial goal for the year
• If you want to buy a house in two years time then perhaps you should start saving for a deposit now and your financial goals should revolve around this

It really depends on what you want