The OKR framework is a method used to bridge the gap between strategizing and executing ambitious business goals, but it can be used for personal goals too. OKR, which stands for “Objectives and Key Results,” has revolutionized the way the corporate world approaches goal-setting. OKR allows teams to focus on big picture outcomes and achieve more than the team thought possible, even if they don’t completely attain the original goal.
Since the late 1990s, thousands of organizations and Fortune 500 companies worldwide have implemented the OKR framework to improve both team and individual performance, and increase their bottom lines. What if you could use these same principles to achieve your personal goals? It’s definitely possible to apply the OKR framework in a non-business context to map your future success.
In the same way that OKR allows companies to “work with purpose,” this framework can help you set purpose-driven goals in every area of your life. When it comes to your personal and financial goals, OKR can help you work towards living your dream life. We share how OKR can apply to your life in a non-business context and actionable tips to maximize its principles. First, let’s cover the basics of OKR.
Jump to our infographic, or keep reading for a more in-depth description.
What Is the OKR Framework? How It All Started
Before setting your own personal goals, it’s important to understand the context of OKRs’ development to understand its impact. The idea of OKR started gaining traction in the ‘90s after Andy Grove taught the principles to John Doerr, who both worked for Intel.
Doerr formalized the teachings of the OKR framework and went on to pen the popular book Measure What Matters. The OKR framework is broken down into an objective that inspires action, key results that measure progress towards that objective, and initiatives that allow the key results to come to fruition. When Doerr introduced OKR to Google’s founders Larry Page and Sergey Brin in 1999, the duo used it to drive the tech giant’s success. To this day, it’s used by Google and countless other companies to set corporate goals and track progress.
Understanding Different Types of OKRs
When you’re creating OKRs to excel in your personal life, you have to be sure they fuel your ambitions while still being reasonable. Otherwise, it’s tough to use a business-oriented framework as a growth tool for your personal and financial goals. We’ve outlined four popular variations of OKRs here:
- These OKRs are extremely attainable and eventually should be 100 percent achieved. The success of a committed objective usually has a direct impact on the quality of your life.
- Example: Overhaul your personal time management system by the end of the month.
- These OKRs are stretch goals with ideal outcomes that still seem somewhat impossible. They aren’t likely to be achieved during the first attempt but should remain on your personal OKR list until they are reached — no matter how long it takes.
- Example: Start a side business based on a passion project.
- Personal OKRs are the goals you focus on to make progress towards lifetime achievements and overall happiness. For example, you can start a new profession that gives you a sense of purpose if you’re not satisfied with your work life.
- Example: Find a new job by the end of the year.
- These personal finance OKRs should push you to make better financial decisions while also being achievable. Even if you’re heavily in debt and living paycheck to paycheck, you can tackle your financial goals one step at a time through the OKR framework.
- Example: Build an emergency fund in six months.
Setting different types of OKRs is easy, but reaching them is the real challenge. It’s hard to believe 92 percent of people abandon their New Year’s Resolutions, but it’s a testament to poor goal setting. When you plan your future and finances with a reliable framework that excites you, you’ll improve your odds of succeeding at your goals.
5 Tips to Achieve Your OKRs
Objectives can be short-term goals that you knock out in a few months or huge goals that might roll over for years. At the end of a time period, a key result is either fulfilled or not. With this in mind, here are some best practices to keep in mind when tracking OKRs in your own life:
- Set and revise objectives frequently
- Don’t go after more than 3–5 OKRs per 3 months
- Strike a balance between an aggressive and achievable goal
- Give yourself a reliable tracking system
- Update your progress regularly
Organizations that don’t innovate or take enough risks lose in the long run. In the same way, not challenging yourself when setting personal goals can leave you feeling disappointed. A system like the OKR framework is a great way to set ambitious goals for yourself that are both feasible and rewarding.
OKRs empower individuals to improve their financial health and reach goals in the workplace through actionable, measurable steps. When you set meaningful OKRs, vague desires become concrete, attainable mini-goals. Using the OKR framework, a huge financial goal like saving for a down payment or funding your college tuition turns into a series of quantifiable, repeatable tasks that you can re-evaluate every few months.
Let’s say you’re trying to increase your salary by earning a promotion or finding a new job. By setting OKRs, you’re forcing yourself to be realistic with your timeline for achievement. Instead of obsessing over getting promoted by the end of the year or increasing your salary by a certain dollar amount, you direct your energy towards the key results that will get you there.
When you’re systematic and practical about your goal-setting, you keep up your momentum and prevent demotivating disappointments. Check out our infographic below for some additional tips to effectively implement the goal-setting framework.
In the simplest terms, objectives describe where you’re going whereas key results describe how you get there. Countless companies and even schools are using OKRs to level up — so why not apply this goal-setting technique to your personal goals? One of the most important aspects of the OKR framework to remember is that it’s designed to push you past your comfort zone to achieve greatness. In the same way that microlearning helps you break down a large goal, OKRs can help you split up a daunting task into more attainable ones.
Even starting small with a few budgeting objectives can change the trajectory of your life. You can lead a purpose-driven lifestyle that embraces failure as a necessary part of learning and growing. Don’t forget to check out our app to keep track of your purchases and address any spending habits.
The post How to Use the OKR Framework to Reach Your Life Goals appeared first on MintLife Blog.
When it comes to making a 401k early withdrawal, there are a number of reasons why it might be tempting. With millions still unemployed due to the pandemic, unexpected expenses are taking a particularly hard toll. One reason why early withdrawal isn’t uncommon in the U.S. might be because it’s easy to assume you’ll have time to rebuild your 401k nest egg.
However, is the benefit of withdrawing your retirement savings early truly worth the cost? For many people, their 401k is their primary method of investing in their financial future. Before making a decision about early withdrawal, it’s important to consider the penalties and fees that could impact you. Read on to learn exactly what happens when you decide to dip into your 401k so you won’t be surprised by the repercussions.
How Much Are You Penalized for a 401k Early Withdrawal?
On the surface, withdrawing funds from your 401k might not seem like a bad option under extenuating circumstances, but you could face penalties. Young adults are especially prone to early withdrawals because they figure they have plenty of time to replace lost funds.
If you’re not experiencing a significant hardship, 401k early withdrawal probably isn’t the right choice for you. Ultimately, you could lose a substantial portion of your retirement savings if you choose to withdraw your 401k early to use the money to make other risky financial moves. Below, let’s delve further into the penalties that usually apply when you withdraw early.
1) Your Taxes Are Withheld
When you prematurely withdraw from your retirement account, your first consideration should be that you’ll have to pay normal income taxes on that money first. This means you’re losing at least roughly 30 percent of your savings to federal and state taxes before additional penalties.
Even if you only have $10,000 you want to withdraw, consider that you’re automatically giving $3,000 of your cash to the government. In the best case scenario, you might receive some money back in the form of a tax refund if your withholding exceeds your actual tax liability.
2) You Are Penalized by the IRS
If you withdraw money from your 401k before you’re 59 ½ , the IRS penalizes you with an extra 10 percent on those funds when you file your tax return. If we use the example above, an additional $1,000 would be taken by the government from your $10,000 — leaving you with just $6,000. If you’re 55 or older, you could try to get this penalty lifted by the IRS through the Rule of 55, which is designed for people retiring early.
Also, there are exceptions under the CARES Act, which is designed to help people affected by the pandemic. There are provisions under the act that state individuals under the age of 59 ½ can take up to $100,000 in Coronavirus-related early distributions from their retirement plans without facing the 10 percent early withdrawal penalty under certain conditions.
3) You Lose Thousands in Potential Growth
Even if you’re not deterred by tax penalties, think twice before you sabotage your long-term retirement savings goals. When you withdraw money early, you’ll miss out on potential future savings growth because you won’t gain the perks of compound interest. Compounding is the snowball effect resulting from your savings generating more earnings — not only on your principal investment but also on your accrued interest.
Also, if you make a 401k early withdrawal while the market is down, you’re doing yourself a disservice because you’ll be leaving thousands on the table. It’s unlikely you’ll fully recover the lost years of compound interest you would have benefited from. You might need to get creative with a passive income stream to help support you later in life.
When Does a 401k Early Withdrawal Make Sense?
In certain cases, it actually might be strategic to move forward with 401k early withdrawal. For example, it could be smart to cash out some of your 401k to pay off a loan with a high-interest rate, like 18–20 percent. You might be better off using alternative methods to pay off debt such as acquiring a 401k loan rather than actually withdrawing the money.
Always weigh the cost of interest against tax penalties before making your decision. Some 401k plans do allow for penalty-free early withdrawals due to a layoff, major medical expenses, home-related costs, college tuition, and more. Regardless of your strategy to withdraw with the least penalties, your retirement savings are still taking a significant hit.
401k Early Withdrawal, Hardship, or Loan: What’s the Difference?
Knowing the differences between a 401k early withdrawal, a hardship withdrawal, and a 401k loan is crucial. Due to the many obstacles to make a 401k early withdrawal, you may find you want to keep it untouched. If you’re convinced you still need to use your 401k for financial assistance, consult with a trusted financial advisor to figure out the best option.
When Does This Apply?
|Your funds are withdrawn to pay off large debts or finance large projects.||Your 401k fund is typically subject to taxes and penalties.|
|You’re only eligible for this type of withdrawal under circumstances such as a pandemic or natural disasters.||Withdrawals can’t exceed the amount of the need and the funds are still subject to taxes and penalties.|
|The loan must be paid back to the borrower’s retirement account under the plan.||The money isn’t taxed if the loan meets the rules and the repayment schedule is followed.|
If you’ve left a job and don’t know what to do with your Roth IRA, a 401k transfer is a good option. Most likely, you will save money and have a wider range of investment options when you transfer your funds. 401k fees can be high, and rolling over your funds to a Roth IRA account could be wise in the long run. Also, be aware that the process is more complicated for indirect rollovers.
- If you’re one of the millions of Americans who rely on workplace retirement savings, early 401k withdrawal may jeopardize your future financial stability.
- There are very few instances when cashing out a portion of your 401k is a smart move.
- In most cases, any kind of early 401k withdrawal is detrimental to your retirement plans.
- Stick to your budget and bulk up your emergency fund to stay one step ahead.
In short, 401k early withdrawals are usually counterproductive. Prevent compromising your hard-earned savings by using a free budgeting tool that will set you up for success. After all, being prepared and informed are two of the most important parts of maintaining financial health.
The post 401k Early Withdrawal: What to Know Before You Cash Out appeared first on MintLife Blog.