Tuesday, October 20, 2009

A $7 million, Big, Hairy, Audacious Financial Goal

Have you set your big goal yet?

A few weeks ago, I wrote about the need to continuously set new goals so that when you accomplish one (like paying off your credit card debt), you immediately move forward and avoid getting stuck.

My big goal, after paying off my credit card, was to stash away $25k in cash over the next 12 months. But after talking with a friend last week, I have to up the ante. For this, I'm stealing a phrase from one of my old bosses, who believed in Big, Hairy, Audacious Goals (BHOGs).

My friend, an attorney in DC, says her financial goal isn't merely to stash away a certain amount of cash, it's to be "independently wealthy". Her definition: having enough liquid assets (liquid = cash, as opposed to investments or property) that she didn't need to work, or could do so at her leisure. How much would that be for someone already making six figures, owning a home and living comfortably? About $7 million would be nice, she said.

Hmm. Out of reach for most working folks? Yep. But that's not the point. My friend dared to set a goal that was a stretch, but still within her own reach. It wasn't a small goal and it's notable that though there was a dollar amount attached, her primary motivation was being enabled to live the life that she wanted. The $7 million figure was the answer to the question "How much do I need to be able to do what I want to do without worrying?"

This has me rethinking my $25k saved goal. It's a good number, and having a decent amount of cash put away IS a good thing. But the number is arbitrary and didn't really come about because of any thinking about it's impact on my own lifestyle or what it'd enable me to do. So if you've set a big goal, maybe you need a BHOG instead.

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