SETTING YOUR FINANCIAL GOALS – THE MOST VALUABLE NEW YEAR’S RESOLUTION.

One of the most valuable resolutions you can make is to set your financial goals. The key thought is to stop “resolving” and start actually “setting”.

The difference is subtle, but it’s an important one.

“I’m going to get fitter” is a common resolution but it then begs the question, “How?” If you find yourself unable to answer, you’re going to get frustrated and that leads to a greater likelihood of abandoning the whole thing before you even start.

If, however, you were to say, “I’m going to swim 40 lengths of the pool three days each week” then that’s your goal. It’s measurable, trackable and achievable and you have given yourself accountability. What’s more, if you hit your goal, the result is that you will be fitter!

It’s exactly the same when we come to talk about your financial goals for the New Year. If you need a little guidance though, simply follow our four-step process to help you track your goals and together we will celebrate your progress towards a prosperous 2022.

“I want to save more” sounds like a great financial goal … but as far as investment planning goes, it really isn’t. It’s not specific and therefore not actionable enough and comes with no real accountability.

If you look at your priorities though, you’ll come to the question of why.

Why do you want to save more?

What are you saving for?

Is it a holiday, a new car, a wedding, a mortgage or home improvements?

Make yourself a list and rank your goals in the order that they are most meaningful to you. It might be that you rank their importance by how soon you want these things, or there might be one that you want to do as soon as possible. As long as you have your priority order though, that’s the main thing.

Now, be realistic about how much you can accomplish in saving towards these goals. It may be more effective to spread your savings across 5 or 6 goals, or it might be better to really focus in on one or two of your main priorities.

Things that are personal always matter more to us.  Anyone can go on a “Family holiday.” But “The Smith Family Mexican Riviera Discovery Tour” is going to be more exciting to save for. A well-named goal helps you visualize it in your mind and gives to an added element that you will look forward to.

Many banks let you name your online accounts, so why not take things a little further and put the name of the goal you are saving towards there too?

“Savings Account” sounds boring!

“Hot tub fund “sounds far more appealing to transfer money to each month.

Setting up automatic saving contributions is easy, and it takes away the pressure of remembering each month – it’s simply another payment that leaves your account.  Always pay yourself first each month and then the savings you are putting aside won’t get lost in amongst all the household bills.

Some goals, such as “clear credit card debt” might take the full year to realise, but that doesn’t mean you have nothing to celebrate along the way. Break the total down into chunks and each time you clear one, treat yourself to something such as a meal out to reward your efforts. Treats don’t have to land you in more debt. You could even reward yourself with a guilt-free lazy day on the sofa if that’s what would incentivise you.

We’re entering a new year, and with so much upheaval during the last couple – there’s never been a better time to take control of what you can and set your 2022 New Year financial goals.

To speak to us about any matters regarding your finances, please get in touch.

This article does not constitute financial advice and should not be construed as such.