Most of us have plans for the future. Maybe it’s a dream holiday, paying off debt, starting a business, or saving enough for a house deposit. Some of us will succeed but many of us won’t.
One of the reasons we don’t meet our goals is lack of clarity and planning.
Value and Goals Based Financial Planning is about setting goals and enjoying the journey as well as the destination. It’s about taking pride in the fact that every day, little by little, we are shaping our lifestyle and taking more and more control of our destiny.
In order to feel in control of our finances, we need to get organised. If we want to create and live the life we want, we need to put our own personal financial plan in place and make the necessary changes to turn our dreams into our reality.
A goal is a dream with a deadline – Napoleon Hill
A goal without a plan is just a wish – Antoine de Saint-Exupéry
Your financial plan will show you what you need to do to get to where you want to go.
What’s your plan?
Planning is about self-realisation and empowerment, and nothing we can do will make us feel more secure than that.
Take some time out and ask yourself these questions. Your answers will form the basis of your financial plan.
- What do I value most in life?
- What are my lifestyle plans for the next 3-5 years?
- Where would I like my life to be 10 years from now?
- How would I like to live in retirement?
SMART goal setting
Achieving our financial goals requires SMART goal setting.
I’ll focus on inspirational lifestyle goals to show you how it’s done. You’re much more likely to achieve a goal if it’s something you really want. My number one tip is don’t focus on the money, focus on what you need the money for. Then every spending decision you make, you can stop and ask yourself, is this getting me closer to my goal or further away?
Reducing your day to day spending while focusing on the bigger brighter picture will help you consistently make the choices you need to make to get you to where you want to go.
So what are SMART goals?
Specific – What exactly do I want?
The more detailed you can be about what you want to achieve, the more chance you have of achieving it. For instance, “I want to sail” is pretty vague but “I want to compete in the Sydney to Hobart Race in December 2018” is very clear.
Whether you have one goal or many, it helps to break them into different time-frames depending on when you want to achieve them. You might have short term (1-2 years); medium term (2-5 years) and long term (5-20 years) goals.
Measurable – How will I know when I’ve got it?
If you don’t know where you’re going, how will you know when you get there?
There’s nothing like setting a real, tangible target to focus your mind. “I want an overseas holiday” is pretty wishy-washy, but “I want to go on a South African Safari and it’s going to cost me $6,000” has the clarity of mind that will help keep you on track.
Achievable – Am I able to do it?
Setting unrealistic goals for yourself will only lead to misery and disappointment. If you’re not used to looking after your money then you’ll need some training and practice. Start small and you’ll get there.
Realistic – How realistic am I being?
Ok, so you want to cruise around the Mediterranean in luxury for a month, in July 2020. That’s great, but if you haven’t started planning your spending budget, you won’t be going anywhere (using a credit card is not an option). Making sure your goal is realistic is a step in the right direction.
Time – When would I like it to happen?
The secret of making your long-term, five-year plan a reality is breaking it down into smaller bite size chunks. Putting away $20,000 for your three-month tour of South America in five years is a daunting task, but saving $4,000 a year or $80 a week is very manageable.
Using the SMART system will help you focus on your goals and change them from being aspirational (wouldn’t it be nice) to attainable (it’s going to happen).
What a difference it makes when you change your language from “I want an overseas holiday” to “I will go to Vietnam and Cambodia in 12 months’ time. I will need $4,000 and I will save $80 per week for 50 weeks. I will do this by going out once a week instead of three times a week.”
Good luck and Bon Voyage!
Nicole Heales is an Authorised Representative (No. 312479) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services Licence No. 223135.
Information contained in this document is of a general nature only. It does not constitute financial advice. The information does not take into account your objectives, needs and circumstances. We are not Registered Tax (Financial) Advisers. If you intend to rely on this tax advice you should request advice from a Registered Tax (Financial) Adviser or a Registered Tax Agent. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this document. Subject to law, Capstone Financial Planning nor their directors or employees or authorised representatives:
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