Financial security requires planning, whether that’s for a business or an individual. You need to know where you are now, where you want to be, and how to crossover between the two. Having a plan and goals makes it possible that you’ll achieve financial security, whatever that means to you.
Here are some steps to setting your financial goals.
Be specific with what you want
It’s easy to say you want “financial security”, but what does that mean to you? Financial security can mean many different things to many different people. Do you want enough cash to handle emergencies? Do you want money to cover retirement? Are you planning on downsizing? Or do you want to live a lavish lifestyle?
Once you know your primary goal, write out what that looks like to you. How much money do you think you will need for retirement to cover your lifestyle? How much would make you comfortable? If you’re unsure about what you would need, talk to your financial advisor, who can ask you the questions to provide you with the necessary guidance to determine how much money to plan for.
Remember that the most actionable goals are SMART (specific, measurable, attainable, realistic and timely). For example, know when you want to retire, how much money you’ll need and how much you can realistically save by that time.
Write your list of goals and put each in a category
Some goals are short-term, some are medium-term, and some are long-term. Planning a holiday to have this year is a short-term goal, while retirement planning is long-term. Once you know your goals, categorise them based on whether they are short, medium, or long-term goals. This will help you plan how much money you need to set aside to achieve your goals and what sort of timeline you’re looking at.
Determine your assets and debts
Most people will have both debts and assets. Achieving your financial goals isn’t as simple as saving money. You will most likely have debts you need to pay off. People often focus on paying off their debts that are in the past, but that means there won’t be as much money set aside for the future.
Before mapping out a plan to achieve your goals, you need to know where you are currently. How much money is available to you? How much are you bringing in monthly? What are your expenses and fixed costs? Do you have debts, and what are the interest rates?
Keep track of the money flowing in and out of your accounts over a few months. Where do you spend the most money? Are there places you could cut back?
Build a plan to help you reach your financial goals
This step can be challenging to take on your own because your habits and patterns might influence how you plan. It’s beneficial to talk with a financial advisor who can review your information and help you set up a plan going forward. They can keep you accountable for achieving your financial goals and assist you in addressing any emergencies that may arise. They can also identify areas where you could cut back and how to make your money go further for you.
Final thoughts
By identifying your goals and making a plan to achieve them, you’re more likely to achieve financial security. Talking with a financial advisor can help you get your finances on track.
If you have any questions, feel free to Join the conversation…