Setting Financial Goals

If you find your New Year’s resolutions never last until February or you swear your dieting programme starts on Monday, then your financial goals are likely to also probably go out the window the moment you set them.And you are not alone, in fact you are in the same boat as many others. Unfortunately, it’s a sinking boat. So many of us leave our long-term financial planning till it’s way too late and will end up working until the day we die or become dependent on our children.

Many experts will tell you it’s OK to start with short-term goals, like paying down debt or paying off your new flat screen TV then move on to some medium-term goals like education or a home, then look at retirement planning. I disagree. I say start with retirement planning.

Here is my disclaimer: we are an instant gratification nation. This makes long-term planning nearly impossible. Because we would rather have the new TV and flashy car, we put off what may be the most important of all, those 20 years between 60 and 80 when you won’t have an income. Look at the cost of living now, think about how much things will cost 20 or 30 years from now and ask yourself how you will survive? Are you putting enough (anything?) on the side that will ensure you live a similar lifestyle when you retire? So back to basics: you need to set financial goals, starting with money management, creating a budget and sticking to it.

Budgeting will teach you where your money is going every month and help you identify where small financial behaviour changes can free up extra cash so you can set it aside for those goals you are about to plan. Your life stage needs to play a role when you set your goals. If you are young and at the beginning of your career there’s more time and you can address short, medium and long-term goals at the same time. If you have left goal setting to your 40's, you may have to focus on aggressive investment so you can put away enough money to retire with some kind of fund. Consider this when you set your goals: an emergency fund is important and three months’ salary put into a high-interest call account is there for when the wheels come off.

A deposit on a home or even a car will bring down your monthly payments and a home will grow in value over the years too. Don’t forget to insure. Insure your life so the ones left behind are not left with the burden of your debt, and insure your assets. Many consumers spend large amounts on their home, car and gadgets but never insure them. You don’t want to be paying for that item long after it’s gone. Don’t let goal setting and investment scare you off. If you are unsure where to start, contact a certified financial planner, an investment specialist who will set a financial plan for you that will be reviewed annually. So get an expert into your corner and live a great life long after retirement.

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