Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.
It’s easy to have big ideas about your financial future, but harder to achieve them. As most dieters know, you can follow the best dieting program, but struggle to stick to it.
The same is true for your financial goals, whatever they include, and the plan you draw up to achieve them.
Even with the best intentions, it’s easy to fall “off the wagon”. Life is full of distractions – for example, that fancy must-have car or overseas trip. It’s also full of changes that can put you off course. And sometimes we just get stuck or lose our motivation.
Here are some tips on how to develop your financial goals in a way that makes them more achievable:
Not all financial goals are achievable or can be done in the timeframe you have set for yourself. Don’t trip yourself up before you start by being over ambitious or impractical.
Ensure your goals are clearly understood and not a hazy list of vague statements, such as to “buy a big house” or “be rich in retirement”. Clear, specific goals – for example, to eliminate my credit card debt with in two years’ time or to accumulate a $50,000 deposit for a unit by the end of 2022 – are much more likely to be realised.
Consider which of the goals are most important to you and rank them by priority. You may not be able to do everything at once.
Your goals should be meaningful and relevant to you and not someone else’s dream. You must really want to achieve them or you might get side tracked.
Set realistic timeframes
Break your goals down into achievable short-term, medium-term and long-term goals. Some may be dependent on achieving others first. Also, break your goals into smaller steps. Small wins will keep you motivated.
Create a budget
Knowing how much money you have coming in and going out each month will help you manage your money better and help you stay on track
Having an automatic direct debit into a managed fund or savings account each month before you get to spend it will also help you on course.
Don’t be too austere
Just as a diet with absolutely no “treats” is bound to be broken at some time, so too is a financial plan that doesn’t allow the occasional splurge. As they say, life is short and you need to have some fun on the journey too.
No plan should be cast in stone and life is full of unexpected changes. Give yourself some wiggle room to cater for changes in markets and your circumstances.
Review your progress
Re-examine your goals and your progress toward them regularly. Pat yourself on the back when you reach milestones.
Be held accountable
Turn your friend, family member or a financial planner into your accountability coach and report back to them on how you are tracking. This may help keep you motivatedto keep going and keep to your plan.
Get back on the horse
If your journey goes off track, don’t give up. Learn from your lessons, work out why your plan failed and get started again.
Remember that CERTIFIED FINANCIAL PLANNER® professionals are qualified to help you work out your financial goals, are very educated on ways to achieve them and experienced in helping their clients stay on track.