Show 032: How to Set Financial Goals – The Top 10 Mistakes People Make Constantly

How to Set Financial Goals

Download The "Ultimate" Options Strategy Guide

I completely underestimated the power of how to set financial goals until about a year and a half ago.

Since then I've changed the way I look at and set goals in all areas of my life (not just financially) and it's made a huge difference.

In today's podcast, I want to really take the time to walk through the Top 10 mistakes people make in the goal setting area which can dramatically alter your chance of hitting and achieving your goals.

Again, I wasn't much different from most people who set silly goals at the beginning of the year just to let them wither away and die 2 months later.

But I made a huge commitment to myself, and my family, that goal setting would be dramatically different for me in 2014 and since then it's changed my life in all areas.

I encourage you to post your goals in the comment section below and share them with everyone here. I'll be posting mine here after a few people comment and share theirs.

In Today's Show, You'll Learn About:

  • #1 Always reduce their targets. Once you get into the habit of reducing your goals you subconsciously tell yourself that you can never hit them. Instead of reducing your targets, I say increase your actions. Any target attacked with the right actions in the right amounts with persistence is attainable.
  • #2 Severely underestimate the time and effort it takes to reach their goals. These are big, important goals after all. What makes you think they'll be easy to get? I would rather see you go after a goal with 10 times the effort and be surprised as to how easy it was to achieve vs. underestimating the effort required.
  • #3 Simply don’t write goals down or review them daily. Let it be written, let it be done is not a strategy for goal setting. It takes just 5 mins a day to review your goals and it's the 1st thing you should do each and every morning when you wake up.
  • #4 Create too many goals. I love referring to this old Chinese proverb that says, “Man who chases two rabbits catches neither.” Now this is not to say that you can only have 1 goal but rather that you should narrow your focus on 1 or 2 goals in each area of your life at a time. Break them down into "mini-goals" if you have to so you can focus your energy.
  • #5 No goal balance. Shamefully I was part of this crowd for many years setting only financial/money goals and not focusing enough on personal, spiritual or family goals. And ever since I started to set balanced goals in all areas I've seen my financial goals get hit faster and faster.
  • #6 Not specific enough. Goals that are vague are never achieved. A common goal like "I want to lose weight" or "I want to make more money" is just too broad for our brains to comprehend. Choose something more specific like "I want to lose 25 lbs." or "I want to make an extra $1,000 each month". Now you've got something to work towards.
  • #7 They need to be measurable. Just as with #6, goals that are not measurable are rarely hit. Even relational goals like "More time with my kids/spouse" can be measured in the number of dates, trips to the park, movie nights, etc. Find something to track your progress and it'll help you get there so much faster.
  • #8 Never assign a due date. With no end date often times you'll find goals lingering from year to year. The constant goal that you always have but never hit. Instead, choose a specific date in the future (June 20th) to work towards.
  • #9 Failure to identify the next action sequence. Hands down one of the most important parts of goal setting. Right after writing down your goal script out the next 5-10 action steps needed to get there faster. If your goal is to make $20k trading options this year then ask yourself, "What are the next 5-10 things I need to do right now to hit this goal?"
  • #10 Rarely personally compelling. If you don't care enough about your own goals to wake up each day and go after them who will? Goals are not meant for anyone but you and therefore you've got to have a compelling reason to attack them daily. I like using the "so that I can" phrase. For example, "I want to take my wife on a date at least 2 times per month so that I can spend more one on one time with her alone."

Links And Resources Mentioned In The Show:

Option Alpha Podcast Show Notes[FREE Download] Podcast Show Notes & Transcript PDF: No time to read the show notes right now? We've made it incredibly easy for you to save time by giving you instant access to the complete digital version of today's show. Click Here to Download Your FREE Copy ?

Free Options Trading Courses:

  • Options Basics [20 Videos]Whether you're a completely new trader or an experienced trader, you'll still need to master the basics. The goal of this section is to help lay the groundwork for your education with some simple, yet important lessons surrounding options.
  • Finding & Placing Trades [26 Videos]Successful options trading is 100% dependent on your ability to find and enter trades that give you an "edge" in the market. This module helps teach you how to scan properly for and select the best strategies to execute smarter option trades each day.
  • Pricing & Volatility [12 Videos]This module includes lessons on mastering implied volatility and premium pricing for specific strategies. We'll also look at IV relativeness and percentiles which help you determine the best strategy to use for each and every possible market setup.
  • Neutral Options Strategies [7 Videos]The beauty of options is that you can trade the market within a neutral range either up or down. You'll learn to love sideways and range bound markets because of the opportunity to build non-directional strategies that profit if the stock goes up, down or nowhere at all.
  • Bullish Options Strategies [12 Videos]Naturally everyone wants to make money when the market is heading higher. In this module, we'll show you how to create specific strategies that profit from up trending markets including low IV strategies like calendars, diagonals, covered calls and direction debit spreads.
  • Options Expiration & Assignment [11 Videos]Our goal is to make sure you understand the logistics of how each process works and the parties involved. If you don’t feel confident in the expiration processes or have questions that you just can't seem to get answered, then this section will help you.
  • Portfolio Management [16 Videos]When I say "portfolio management" some people automatically assume you need a Masters from MIT to understand the concept and strategies - that is NOT the case. And in this module, you'll see why managing your risk trading options is actually quite simple.
  • Trade Adjustments/Hedges [15 Videos]: In this popular module, we'll give you concrete examples of how you can hedge different options strategies to both reduce potential losses and give yourself an opportunity to profit if things turn around. Plus, we'll help you create an alert system to save time and make it more automatic.
  • Professional Trading [14 Videos]Honestly, this module isn't just for professional traders; it's for anyone who wants to have eventually options replace some (or all) of their monthly income. Because the reality is that mindset is everything if you truly want to earn a living trading options.

PDF Guides & Checklists:

  • The Ultimate Options Strategy Guide [90 Pages]: Our most popular PDF workbook with detailed options strategy pages categorized by market direction. Read the whole guide in less than 15 mins and have it forever to reference.
  • Earnings Trading Guide [33 Pages]: The ultimate guide to earnings trades including the top things to look for when playing these one-day volatility events, expected move calculations, best strategies to use, adjustments, etc.
  • Implied Volatility (IV) Percentile Rank [3 Pages]A cool, simple visual tool to help you understand how we should be trading based on the current IV rank of any particular stock and the best strategies for each blocked section of IV.
  • Guide to Trade Size & Allocation [8 Pages]Helping you figure out exactly how to calculate new position size as well as how much you should be allocating to your each position based on your overall portfolio balance.
  • When to Exit/Manage Trades [7 Pages]Broken down by option strategy we'll give you concrete guidelines on the best exit points and prices for each trade type to maximize your win rate and profits long-term.
  • 7-Step Trade Entry Checklist [10 Pages]Our top 7 things you should be double-checking before you enter your next trading. This quick checklist will help keep you out of harms way by making sure you make smarter entries.

Real-Money, LIVE Trading:

  • IWM Iron Butterfly (Closing Trade): Exiting this IWM iron butterfly options trade gave us a $1,100+ profit after pinning the stock price one day before expiration at the peak of our spread.
  • CMG Iron Condor (Opening Trade): I just recorded my live trading platform (and real money account) as I walked through the process of entering a new iron condor trade in CMG stock. Inside you'll see me analyze, price and fill the trade in real-time.
  • APC Strangle (Closing Trade): Took about $150 out of this small APC strangle trade even after the stock moved completely against our short call strikes this month. But as always, implied volatility always trumps direction and because IV went down, the value of this spread dropped more-so than the impact of the directional move higher.
  • IYR Call Credit Spread (Adjusting Trade): This adjustment is good for 2 reasons. First, it reduces the overall risk in the trade if IYR continues to move higher. Second, it still leaves room for the stock to fall back down into our new profit window.
  • XHB Straddle (Closing Trade): We were able to bank a $120 profit early in the March expiration cycle for our XHB straddle with the stock trading right in the middle of our expected range.
  • AAPL Call Calendar (Opening Trade): Look behind the scenes as I use our new watchlist software to filter quickly and find this AAPL call calendar spread trade during overall low implied volatility in the market.
  • COF Strangle (Adjusting Trade): Here I recorded my live trading screen (and real money account) showing you the entire thought process we used to make an adjustment to my current short strangle in COF to reduce risk.
  • GDX Strangle (Opening Trade): With gold's high IV we are getting into a new strangle with a 70% chance of success and a decent credit for selling option premium.
  • IBB Iron Condor (Closing Trade): Today we're exiting an iron condor we traded in IBB for a $142 profit. Inside you'll see me analyze the exit price and fill the trade in real-time.

Thank You for Listening!

I'm humbled that you took the time out of your day to listen to our show, and I never take that for granted. If you have any tips, suggestions or comments about this episode or topics you'd like to hear me cover, just add your thoughts below in the comment section.

Want automatic updates when new shows go live? Subscribe to the Option Alpha Podcast on iTunes, Google PlaySoundCloud, iHeart Radio or Stitcher right now before you forget - it's fast and easy.

Did You Enjoy the Show?

Please kindly consider taking just 60-seconds to leave an honest Review on iTunes for The Option Alpha Podcast. Ratings and reviews are extremely helpful and greatly appreciated. They do matter in the rankings of the show, and I read each and every one of them!

Also, if you think someone else in your social circle could benefit from the topic covered today, please share the show using the social media buttons you see. This helps spread the word about what we are trying to accomplish here at Option Alpha, and personal referrals like this always have the greatest impact.

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.