With 2016 coming to a close, we’re reflecting back on how we’ve succeeded in accomplishing our financial goals. I’m convinced a large part comes from setting up our goals in the right way. For example, we put our goals out in the public and we’re held accountable from Day 1. The other essential ingredient is we finally figured out the right way to reverse engineer financial freedom.
“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”
For those who are not goal setters, I hope the above quote from Socrates at least inspires someone to copy the approach recommended below in SOME capacity. It worked for us.
To Reverse Engineer Financial Freedom involves understanding the difference between push goals and pull goals.
What are Push Goals?
Oh man, we’re pros at push goals since we used them exclusively for our 0-20% savings rate era.
Save $50 on the next paycheck.
Invest $1,000 this month.
Cut back on our grocery bill this month by eating less meat.
Eliminate cable to save $100 a month.
Increase our net worth by $10,000 over the year.
We could go on for days!!
Push goals fail because they require mental energy, discipline, and persistence.
Pull goals by contrast are not inherently long term, but they are sourced on our values and beliefs AKA our long term motivations (more on this below).
Feeling the urge to save $5 per meal by cooking doesn’t last forever, especially when you walk by a Burger King on the way home. (This is true, and somehow, I have NOT given into the Whopper temptation!)
What are Examples of Pull Goals?
In our case, we started to think about what type of lifestyle we wanted.
So, we included everything.
What type of house we wanted, the food we’d eat, the amount of vacations we’d take each year, etc. Once we came up with the lifestyle, we knew the amount of money it would take.
Needless to say, that money goal is a lot. “A lot” to the tune of two million dollars. But, that money doesn’t just represent a two with six zero’s. It means much more.
It means we can visit friends and family at any time of the year. We can support a loved one in case of an emergency. If our favorite show is in town, we can buy tickets without worrying about our savings (looking at you, Hamilton). We would have peace of mind and not worry about our credit card bills.
That lifestyle is what now pulls us to save today. We’re compelled to hit our goals because it means we’re that much closer to our ideal lifestyle.
Saving $5 by cooking a meal becomes a piece of a bigger puzzle. We start to connect the dots and become all that more excited with each success.
Plus, we figure we’re young and we don’t need excessive luxuries until Mrs. Distilled Dollar picks a Honeymoon location.
Especially since our earning power is only expected to grow as we progress in our lives.
The Secret Power Behind Pull Goals
Is that heading a bit dramatic? I would say, ‘yes’, if it was January, but now that we’ve seen pull goals in action, I’m going with a hard, ‘no’.
The real secret of pull goals is that they force us to reverse engineer our lives.
When we know exactly what we want, it becomes much easier to figure out what it takes to obtain it.
Instead of imagining, “I want to be a millionaire,” it makes much more sense to work backwards from your ideal lifestyle.
In our case we know what our future costs are on a monthly level. From there, we know what our monthly income would need to be to cover those expenses.
We’ve built our way up from the bottom to arrive at our $2,000,000 number.
Once we gain the clarity of what it takes, we become “pulled”, so to speak, into achieving that vision.
Seriously, it works.
Push vs. Pull Goals Summary
Try it out for a few days, or a few weeks, or months. Ideally, incorporate a Pull goal in some major area of your life and see it in action.
You might be surprised by how well Pull goals work!
Have you incorporated Pull goals in the past? What are your experiences in the Push vs. Pull battle?
P.S. I’ll be sharing my blogging goals next week along with my Q4 2016 Blog Income report and Q4 2016 Net Worth update.