By: Roshawn Watson
avoidance is understandably our medicine of choice, especially when friends are involved. However, perhaps avoidance is not the best strategy.
The company you keep matters just as much as what you do. However, if you refuse to address money in your relationships, your social network will fail to meet an important need in your life. For example, the correct environment will help you produce what your skill alone cannot. Conversely, if the wrong people are around you, they may indirectly hinder you from achieving any form of excellence. Anyone that you lend your ear to can shape your future. I previously illustrated how friends can influence your finances, and I established the importance obtaining the right friends. This article will explore two critical financial questions for your friends that will shape YOUR financial and total successes.
Question One: What Are Your Financial Goals?
The rationale for asking this question is to make sure that your goals are congruent. Harmony is so important: two are better than one. Your friends’ goals can have a huge impact on the pursuit of your own goals.
When I decided to purchase my first car with cash, there were many who told me that I would not be able to do it (I was a teenager) unless I settled for an old beater. They admonished me to “be normal” and get a loan (bad advice). Boy am I glad I did not listen to them. Because I paid cash, I was able to negotiate down the price I paid for the car by 39%. Had I taken the advice of my well-intentioned but ill-informed friends, I probably would have paid an extra 20-30% on the sticker price (because of interest). In effect, these individuals were enemies to my goal of financial independence. The status quo was fine for them, and their current lives reflect it.
This same principle also operates in reverse. I have seen the power of people joining together to achieve a desired goal. For instance, I will never forget watching my mentor, who is a professional speaker, pour out his heart via a live webcast. He was explaining his desire and plan to aid a poverty-stricken nation in South America. In that brief webcast, he raised several hundreds of thousands of dollars towards his goal. Because his friends shared his goal, he did in minutes what others take years to do.
Question Two: Are your goals SMART?
Not all goals are created equal. Some goals are merely pipe dreams if they are not accompanied by a plan to achieve them. The most powerful goals are SMART…
- S – Specific
- M-Measurable
- A- Action-oriented
- R- Realistic
- T- Time-oriented
Consider the famous study performed on Harvard MBA students.
In 1979, the students were asked “Have you set clear, written goals for your future and made plans to accomplish them?” 84% of respondents had no specific goals at all, 13% had goals (but they weren’t written down), and a paltry 3% had written goals and plans.
10 years later the members of the class were interviewed. The 13% who had goals earned twice as much as the 84% without goals. Moreover, the 3% with clear written goals were earning an average of 10 times as much as the other 97% put together. Thus, SMART goals were the key to their extraordinary success.
The validity of this study has come under scrutiny. Since I cannot find the original article, I can not defend its merits. However, in principle, this illustration provides the basis for just how powerful goal-setting can be. Indeed, one of the most important things you can do for your finances is to keep yourself in the company of uncommon goal-setters. Your behavior will be elevated accordingly, and you will achieve financial and total successes that few (i.e. 3%) can even dream about!
Great article. As I read your articles, I seems that perhaps you are very familiar with Brian Tracy's work?
Sophic,Thanks for the positive feedback. I am unfamiliar with Brian Tracy, but I will certainly have to check him out.
Without knowing more details of the study, it's impossible to know whether the 3% made 10 times more because of the act of writing their goals down, or because they were simply the kind of people that could make lots of money and those types of people write their goals down.
"GABE"I understand your concern about the validity of this study. I have questioned it myself because I haven't been able to locate the original published work. Rather, there are commentaries on the study. However, as you point out, the spirit of the advice and definitely what most commentators have concluded is that goal setting does make a profound impact on what one may achieve.
Thanks for the article. I agree that the company you keep definitely can influence your goals/spending. I also liked your acronym SMART. Thanks again I look forward to reading more.
Thanks Self-directed IRA. I appreciate the feedback. I continuously evaluate those around me. It's amazing what you can do with the right team around you.
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Hey Shawn, Im new to your site got a couple questions. I see that your incorporated, do you sell any products or have a service? How long have you been studying Finance?Who is your mentor(s)? And last but not least, are you self taught or are you in college? I too, like you, have been studying finance and business. I agree with you 100%. We are a rear breed. Most individuals do not understand the concept of passive income nor do they understand the difference between Assets and Liabilities. The journey of an entrepreneur or investor is a lonely one, yet it's the one with the biggest reward. Through all my studying what i realized most, is that the more you know, the more you need to know. The study of money is an ongoing learning experience.