Canny Advisory l Helping You With The Bigger Picture Financial Goals
Canny Advisory l Helping you with the bigger picture financial goals – when it comes to financial goals, its best to attack them head on – they are the targets and priorities we set in relation to how we spend and save our money. They can be big, small, short term, long term and everything in between. Where we are in our life stage often helps dictate what our goals are.
The new year is a common trigger for us to think about what we want to achieve in the coming months, years and beyond, although we would encourage you to follow the guidelines and tips at any time when it comes to figuring our what your financial goals are!
Think about what is important to you and all the things you wish you could have or do, from the smallest thing to the largest, even if they seem silly and unachievable. Then start to sort these goals/wishes by those that can be achieved fairly quickly and easily, those will take longer and require more planning, and those that need to become a long-term strategy.
It is recommended you follow the SMART format for your goals – Specific, Measurable, Achievable Relevant. Timely.
S is for SPECIFIC – be as clear as you can with your financial goal/s. Follow the five “W” rule, ask yourself; who, what, when, where and why?
M is for MEASURABLE – how are you going to measure your progress? How will you know when you have reached your goal?
A is for ACHIEVABLE – regardless of whether your goal is big or small, it needs to be attainable. You may lose focus and enthusiasm pretty quickly if you have set yourself too high a target because you may feel that you are getting nowhere, and all of your sacrifices are for nothing. Stretch yourself but ensure your goal can be met.
R is for REALISTIC – similar to the above, make sure your goal is realistic otherwise you run the risk of losing motivation. Make sure you can commit to your goal for the duration.
T is for TIMELY – when do you expect to achieve your goals by? Having an open-ended goal without an end date will challenge your motivation, especially if you feel there is no end in sight!
WHY WOULD YOU DO THIS?
Having a financial goal will inspire you to reach your target. Without a goal we tend to just keep going about our business without a financial purpose and will spend money on items that we want but potentially do not need. And if you are spending within your means, there is no real problem with that, except you will not be able to move forward financially.
Think about this: instead of buying a coffee every day, if you invested that $25 per week you would have saved over $4,000 within three years – there’s a new lounge suite! In five years, you will have saved over $7,000 (or a year of school fees!), $11,000 for an overseas holiday in seven years, or $29,000 for a new car in 15 years’ time. This is just an example of getting a result by having a plan and sticking to it! Your goal may be on a bigger scale, for example you may be saving for a house deposit for preparing for retirement. However, the principal remains the same: set yourself a target and have a plan on how to get there. You may “fall of the wage” occasionally – that’s ok, as long as you jump straight back on!
WHERE DO YOU START?
By following these four steps;
- YOU NEED TO START WITH A BUDGET! It is impossible to have an achievable goal without knowing your starting position. Capture all income and expenses to ascertain your current cash flow surplus (or deficit) and also to take stock of exactly where your money is going. Are there any opportunities to save money before you even start with your new goal(s)? Perhaps cancelling any subscriptions that are no longer relevant, or getting a better deal on your phone plan and/or utilities. A budget will illustrate your financial limits (remember your goals need to be achievable). There are many free apps available that track your spending for you – simply link your bank accounts to the app and the hard work is done for you.
- HAVE AN EMERGENCY FUND! Do not stretch yourself to the limit with your financial goals. It is very important to maintain a safety net at all times in case of an emergency expense or sudden loss of income.
- PAY OFF ANY CREDIT CARDS! This may be your goal – unpaid credit card balances are charged excessive interest. The advantages of saving for a financial goal must be compromised by having to pay unnecessary interest and bank fees on bad debt.
- DEVELOP GOOD SPENDING + SAVING HABITS! As good as your intentions to reach your financial goals may be, sometimes things happen that are out of our control. Perhaps there is an economic downturn, or perhaps your circumstances change unexpectedly. Sometimes “life” happens and when it does, good habits will hold you in good stead to be able to get back on track as soon as circumstances allow. In terms of an economic downturn, again, good habits and sticking to your plan will mean that you will remain on track regardless of macroeconomic events happening around you. And in the worse case scenario where you are relying on your investments to provide income, a good savings history will mean you have a financial buffer to fall back on until the market rebounds, or at least to “take the pressure off”.
GIVE IT A GO!
Have a go at setting yourself some financial goals following these guidelines. Remember to track your progress to keep yourself motivated. We would love to hear about your results. Or, alternatively, if you find that you were not able to reach your goals, we still want to hear about it. Together we may be able to work out what went wrong and work on the next steps.
EG // do you need to break you goals down into smaller, more achievable parts? Or do you need to reassess your goals all together?
Canny Advisory l Helping you with the bigger picture financial goals, we want to hear about all of your success and your attempts as the year progresses, get in touch so we can help.