The basic framework to money management begins with your overall objective.  This is supported by specific goals, overtime as performance to the overall objective is measured the specific goals may be modified.

Some go with multiple objectives, personally I have always been a believer in simplicity and focus.  You might have a number of specific goals (shorter term and changing over time) but the objective should be straightforward and longer term (15 to 25 years).

How it could work

Objective:  Have more than a million in joint net financial assets by age sixty-five

Goals:

• maximize registered retirement saving plan contributions each year
• maximize tax free savings contribution each year
• Achieve a dividend return for total net financial assets of 3% a years
• Minimum internal capital growth rate (i.e., net of new investments) of 5% (both realized and unrealized gains)

And so on …….  (You could have goals around asset mix, interest income, etc)

The key thing to note is each goal is very specific and easily measurable, that is either it was obtained or it was not.

What Next

Use the specific goals for detailed planning.  Consider how to achieve the goals using the tools at hand.  I have previously done a number of posts about things like financial and retirement planning.  This posts provide some good ideas about the many of the tools and techniques you can use to assist with achieving your goals.

For example, if a specific goal is to maximize your TFSA contribution each year, financial planning tools can assist is defining an approach and the associated steps to achieving this goal.  Intuitively it’s pretty obvious you are more likely to achieve the goals with planning than otherwise (although with luck goals can be achieved randomly too).

Why Bother?

One of my favorite sayings is “If you don’t know where you are going, how can you plan to get there and when you arrive how will you know it?”  Setting your objective is the first step in answering that question.  Specific goals provide the flexibility to change direction over the long term,  as to how you achieve the objective.