Yearly Review and Goal Setting: 5 Questions to Help You Create Your Ideal Life

In this article, I’ll share five simple questions and some ideas to help you to move towards your ideal life (and not just towards your financial goals).

Most Financial Independence enthusiasts have an annual review and goal-setting routine. We check how our investments performed over the last year, calculate our savings rate, review our spending and assess how much closer we got to reaching our financial goals.

Usually, the next step is to then make plans for the next year. We decide how much we want to save and invest, create a budget or spending plan and make some projections for our wealth creation goals.

We basically do all of this to answer two simple questions: how much financial progress did we make over the last 12 months and what will we do to make even more progress over the next 12?

These are important exercises for anyone on the path to financial independence. After all, what gets measured gets managed.

However, many of us forget to check our progress towards the ultimate goal behind financial freedom: living a happy, meaningful life.

So today I want to share five questions that you can sue to assess whether your financial plan is helping you move towards your ideal life. I hope some of them become part in your annual goal-setting routine.

Here we go:

Question 1: How happy are you?

The question is deliberately broad, it’s not about the different areas that make up our lives, it’s about general trends. So, how happy would you say you currently are on a scale from 1 (super miserable) to 10 (the happiest you could ever be)?

I ask myself this every year and have done so since I was 19. It’s a variation of an exercise we did during a student leadership seminar I participated in at the time and it stuck with me. I find it really useful to get a general idea of how well things are going in my life.

Here is my little happiness tracker (nothing you can’t put in a spreadsheet, right?):

Once you’ve done this for a few years, it becomes easy to see trends that are sometimes hard to uncover without this bird’s-eye view. You can then use this information to make changes and redesign different elements of your life.

You can also create your own personal happiness chart for the past few years retrospectively (and then update it every year moving forward). While doing this in retrospect is not as accurate as doing it “in the moment” every year (because you have to rely on your memory), it can still be a helpful exercise.

If you’d like a copy of my tracker so you can use it as a template, please enter your details below. I’ll also send you a 2-page worksheet to help you reflect on your personal happiness graph once you’ve created it.

Question 2: What are your “big rocks”? (Put your money where your mouth is)

What are the most important elements of your life, your big rocks? These are your core values and often the things we say are the reasons we want to pursue Financial Independence (to have more time and attention to focus on them). Things like relationships, health, contribution, family and adventure come to mind.

In most years, your big rocks list will be the same or very similar to the year before. But not always – things can and do change over time. For instance, family/children was not even in my top 5 a few years ago, but now it definitely is.

Here is an idea for those who are prone to delay happiness and proper focus on their core values along the path to FI: Pick a generous dollar amount and allocate it to each of your big rocks when creating your spending plan for the next year.

This could look something like this:

The key here is that you can’t spend the money from these categories on anything else. However, the categories themselves are pretty broad. You could, for instance, spend the money in your “relationship” category (if that is one of your big rocks) in one hit – think a balloon ride or luxury weekend getaway or in smaller chunks throughout the year (several fancy dinners or similar).

This strategy will help you invest money intentionally and generously in the areas of your life that are important to you. You can be as frugal as you want to get to FI in other areas, but this way you won’t compromise spending money on the things that make you happy. It’s the ultimate “put your money where your mouth is” strategy.

Important: This big rocks budget should not replace your general discretionary spending, it’s an addition and an investment in the things that make up your ideal life.

It’s also important to come up with a rule for what happens to the budgeted money if you don’t spend it by the end of the year. I have a client who really struggles to break away from his scarcity mentality. He has made the rule that any unused funds from his big rock categories will be donated to charity at the end of the year. This has helped him actually use it, because it’s gone (and making a difference) either way.

Question 3: Where do you currently stand on the Financial Freedom Spectrum?

Are your lifestyle and mindset aligned with the financial freedom you’ve already created for yourself? Or do you have a scarcity mindset that is holding you back from living your best life?

When you review your financial progress every year, it makes sense to also check if you are moving further into the “green zone” of the Financial Freedom Spectrum as your wealth grows.

Here is my personal green zone progress chart:

Developing an abundance mindset and reminding myself to enjoy life and the freedom I have already built is probably the number one reason I feel pretty much financially independent already (although we still have 20% to go).

You can’t enjoy your wealth if you stay stuck in the red zone. Mindset is key, so I encourage you to include this little assessment in your annual review to ensure you are also on track mentally, not just financially.

Question 4: What steps will you take over the next year to get closer to your ideal life?

If you’ve followed my blog for a while, you probably know that I strongly believe that we should not delay happiness along the path to FI. Many of us use our FI goal as an excuse to neglect building the life we really want (“I’ll get to that later, once I’m financially independent”). But I think we all know that that is not really how it works.

So what are some things you could do in the next 12 months to move closer to your ideal life? Doing the “big rocks” exercise (question 2) and allocating some funds towards these areas is a good first step.

But what else could you do to achieve a higher happiness score (question 1) next year? These could be things like booking a nice family holiday, committing to a fitness plan, or learning a new skill.

Or, depending on where you stand financially you could look into different lifestyle designs and explore things like going part-time, planning a sabbatical or starting a business.

If these are things you want to do once you reach FI, there is no reason you can’t start working towards them now.

Question 5: Is your financial plan supporting your life plan?

Lastly, ask yourself if your life plan and financial plan are still in sync.

You may have started out with a “plain vanilla” financial independence plan and an “I’ll figure it out when I get there” life plan.

But maybe things have changed. Maybe you have a clearer vision of your ideal post-FI life now. Maybe you’ve started a family and want more time with your kids sooner rather than later.

Or maybe you’ve found a job or started a business you really enjoy and don’t want to fully retire any time soon. If you know you’ll be generating some work income once you “retire” from your full-time career, it makes sense to include it in your plans. You could, for instance, consider a “flex rate” approach to account for your retirement income.

It’s a good idea to assess whether your financial plan still supports your goals once in a while.

Fortunately, we have moved on from the financial independence stone age, and there are now more flavours to choose from than just vanilla. If you feel an alternative path to FI might be for you, why not look into options like semi-retirement and see how this would impact your plans?

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I hope you found these five questions and the ideas I shared helpful and will incorporate some of them into your yearly review and goal-setting routine.

Remember, the ultimate goal of the journey to financial independence isn’t to have a massive nest egg. It’s to live a happy life and do the things that bring us joy and meaning.

So while measuring our financial progress is definitely important it is just as important to ensure we are also on track when it comes to building our ideal lives.

All the best for the next 12 months! 🙂

Feel free to share some of your insights and how you are going to improve your life in the next year in the comments!