Financial goals often focus specifically on retirement… making sure you have enough superannuation to support your ideal lifestyle. And while this is undoubtedly incredibly important, it doesn’t need to be your only target.
If you start setting financial goals now, you can be confident that you are building great habits that will last you well into the future.
When you don’t have anything specific to aim for it’s possible that you’ll end up over-spending, so today we highlight some of the things you can consider when laying down your new financial goals.
Short-term and long-term
Goals tend to fall into the categories of short-term or long-term, depending on the scale of planning required and the eventual achievement. But it’s not uncommon for them to be connected when you look at your overall financial plan.
For example, if one of your first goals is to create a budget, then this is likely to be a short-term goal as it would usually only take a few hours. However, if your goal is to buy your first home, this would be a mid to long-term goal as there is a significant amount of time involved in saving a deposit and executing plans.
In this instance, the short-term goal of creating a budget is a crucial step towards achieving your long-term goal of property ownership… because without the budget it could be challenging to save the money you need.
Document your goals
It might sound simplistic, but you should always document your goals… write them down. When you put pen to paper (or fingers to keyboard) it’s like you are making a true commitment to yourself. No longer are they just thoughts running through your mind… they are now tangible, and you can’t ignore them as easily.
You can go one step further and put them on a post-it note, then stick them on your computer screen, or your bedroom mirror, or on the dashboard of your car… anywhere that you will see them regularly. Having them front of mind all the time will help you stay on track.
Specific and measurable
Next up, remember to be specific when you set your goals. There’s no point in saying something vague like, ‘I want to be better at managing my money’… while that is certainly an outcome of reaching your goals, it is too broad and doesn’t keep you accountable.
Instead, make your goal definitive – something like, ‘I want to save for my home loan deposit.’ Then go the next step further and add a measurable element to the goal. ‘I want to save $50,000 for my home loan deposit.’ Once you have the exact details of your goal, you can look at your budget and start working out how to achieve it.
Set a deadline
If you left your financial goal open ended, do you think you’d ever actually reach it? Setting a deadline gives you even more accountability… but make sure it’s a realistic deadline. If you want to save $50,000 then it’s unlikely you’ll be able to save that in a single year… unless you are expecting a significant financial windfall.
One way to approach the goal is to break it down into smaller elements. Aiming for $10,000 targets might be easier to start with and keep you motivated. A goal should be challenging but not impossible.
The end goal - retirement
Of course, as we mentioned at the start, retirement is always a major financial goal and you do want to make sure that your superannuation and other investments will support you when you are no longer working.
If you are unsure about whether your personal circumstances are pointing you in the right direction then it can help to seek professional advice.
Here at First Financial, we have a team of dedicated Financial Advisers who can help you build your wealth and set you up for your dream retirement. To find out more about our financial planning services, please contact us today.