It might seem repetitive, daunting, or even downright unnecessary to craft financial goals each year, but it’s important to do so. Making your end goals top of mind at the start of 2019 will help you stay on track so you can achieve them sooner.
This does not constitute advice and advice should be sought in all instances before acting on it.
Take some time to set your financial goals for this year while the confetti is still being cleaned from the streets.
In our previous article, we briefly touched on the types of goals that you should consider while reviewing your finances to ensure you start the year off on the right foot. So, we thought it would be useful to take a deep dive into how you can set your own and elaborate on the different kinds of plans you should be crafting.
Where do I start?
The first step is to think of the big picture – not just what your goals might be, but why you want to achieve them. Attach emotion to your objectives to make the scenarios you’re preparing for, or against, more real.
Next, consider where you are now – your income, your tax situation, budget, and overall financial health and pinpoint exactly what you’re hoping to achieve with each. From there, you can design your overall short, mid, and long-term goals.
Think ahead
Short-term goals are generally achievable in one to three years. They’re smaller scale objectives that you can tick off as you reach them to help you feel accomplished. Creating a budget, starting an emergency fund, and paying off your credit card or other small debts are all examples of short-term goals. Often, these types of goals need to be completed before moving on to focus on larger, more intricate ambitions.
Mid-term goals could take three to five years before they’re attained. Once you have a handle on your finances and have a few completed short-term goals under your belt, you can focus on slightly more involved mid-term goals. You might want to take out supplemental insurance or other forms of income protection. Or maybe you have student loan debt that you want to finally be rid off. Maybe you’ve dreamed of buying a home or sending your child to university. These are all major accomplishments that are ideal mid-term goals.
Long-term goals might take you anywhere from five to ten years (or longer!) before you can tick them off your list. Perhaps the biggest and most important long-term goal is saving for retirement. Figure out exactly how much you’ll need to earn to maintain the lifestyle you want after you finish working and figure out your savings plan from there.
Get SMART
The tried and true method for setting goals is the ‘SMART’ method. Ensure they’re specific, measurable, achievable, realistic, and time-bound.
For example, “saving for retirement” is not a SMART goal. Instead, think of structuring your goal in a way that hits on all five aspects such as, “I will save 2% of each month’s pay for five years, increasing the portion after raises or promotions.”
Take action
Once you’ve decided on all your goals, it’s time to write them down in black and white. Having something tangible to refer back to helps keep your goals. And when you do achieve what you set out to do, make sure you reward yourself for a job well done.
Good old pen and paper might be enough or you might want to utilise online tools or spreadsheets to help keep yourself on track.
While it might seem overwhelming, setting financial goals for 2019 is well worthwhile, whether they’re short-term and can be realised within the year or if they’re long-term and you only make baby steps toward them.
You don’t have to undertake this mission alone, though. Book some time with your financial advisor to review your plans and get advice from a professional.
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