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Financial goals are often like New Year’s resolutions – we’re really excited to make them, but they can easily slip off our radar after a while. When it comes to your goals, putting relevant and feasible ones in place will allow you to develop an effective plan to achieve them. Some people find it difficult to create financial goals, whereas others make goals easily but have trouble sticking to them.
This blog will advise how to create informed financial goals and strategies to stick to them!
Setting your financial goals
Write them down
When setting your financial goals, writing each one down is a great way to envision them. Putting pen to paper solidifies these goals and makes you more likely to achieve them. Make copies and put them in places you’ll see them, such as on your fridge and the bathroom mirror. Set your goals as your phone screensaver, too, so you’re constantly reminded of what you’re trying to achieve and what the end goal looks like. It’s also a good idea to share your goals with someone who will keep you accountable. This might be a friend, partner or family member who will remind you of your goals if you start to stray.
Some examples are below:
- Retirement planning
- Accessing super
- Provide your children the best possible future
- Financial independence
- Become debt free
- Buy a home
- Plan for your future
- Buy an investment property
- Protect yourself and your family
Be specific
There is no point in setting a goal that says something like, ‘I want to have more money’ (don’t we all!). Instead, create specific, clear objectives – the more detailed, the better! By following the S.M.A.R.T framework (specific, measurable, achievable, realistic and timely), you’ll create a guide for your goals, making it easier to plan a strategy to achieve them. For example, instead of saying, ‘I want to have more money’, a S.M.A.R.T goal might say something like, ‘I want to save $10,000 to contribute to my emergency fund within the next six months’.
Categorise them into short, mid and long-term goals
After writing out your S.M.A.R.T goals, group them into short, mid, and long-term categories. These can be categorised into the following:
- Short-term financial goals: six months to five years.
- Mid-term financial goals: five to ten years.
- Long-term financial goals: more than ten years.
Having goals in these categories will make your planning phase a lot easier.
Set deadline
Deadlines are what will help you put together your strategy. While setting a clear end deadline is important, adding smaller deadlines to break the goal into manageable pieces is ideal. If we go off the goal mentioned previously, you might dedicate a specific amount monthly, fortnightly, or weekly. Setting reminders will help you stick to these deadlines. For example, you might set up a direct debit in your bank account, or a reminder as to how much you need to have set aside to meet these deadlines.
Get into a good habit
Chances are that achieving your goal will mean you need to add or alter some of your existing money habits. Once you’ve gotten into a routine, it’ll be much easier to manage. To learn good habits, consider assigning regular days of the week where you’ll make progress towards your goal – whether that involves personal banking, reviewing your spending and budgeting or making a phone call – and stick to it!
Sticking to your financial goals
Establish your ‘why’
Figuring out why you’re setting a goal is crucial. Are you making this goal because it aligns with your lifestyle, values, and financial situation, or do you think you should because ‘everyone else is doing it’? Your ‘why’ might be something as simple as ‘because I want financial stability for my family’ or something a little more specific. Regardless of your ‘why’, make sure it’s relevant to you.
Regularly monitor your goals
Like most financial undertakings, monitoring your goal regularly is a great way to ensure you’re on the right track to achieve it. Every goal worth attaining is worth micromanaging. Before you start, create a plan where you set smaller targets that build up to your end goal. Next, set concrete days where you will check in with your progress and how you’re tracking against these smaller targets. Are you on track to meet your goal or a little behind? This will help you to reanalyse where you’re at and tweak the process where necessary.
Set up automated transactions
One thing you can put in place if your goal is around saving money (or transferring it somewhere else, such as the share market or a different bank account) is to set up automatic transfers. Setting these up right after your paycheck is scheduled to hit your account means the money will be ‘gone’ before you have the chance to notice. It also means you’re not at risk of spending it that month. It’s also a way that those who aren’t the best at checking in with their finances can still progress towards their desired outcomes without needing to transfer funds manually.
Let go of the things that aren’t working
What works for someone else might not work for you. No two people are the same, so something that works for a family member might not work for you. If you try a strategy to achieve your goal and you find that it isn’t working, alter the strategy or let go of it entirely so you can re-think another one. For example, if you take up a second job to earn some extra cash but miss spending time with friends and family, it might be worth cutting down the time you’re working or pulling the plug altogether. These changes may slow down your progress. However, you may also find something that works better for you.
Enlist the help of a financial advisor
Lastly, one of the most important things you can do when it comes to your financial goals is to enlist a financial planner's help. At Inovayt, our expert team of financial advisors can guide you through all stages of the goal-setting process while simultaneously educating you to make informed financial decisions.
Setting financial goals and creating a strategy to stick to them is no easy feat. Often, we try doubly hard at the beginning when a goal is ‘new’ and ‘exciting’, but as time goes on, it’s easy for our interest in these aims to drop. If you’d like guidance on creating financial goals and sticking to them, get in touch with one of our financial advisors today.
