There is no better time than a new year, to set your focus on new goals to help achieve your dreams and aspirations. But when it comes to setting out your own financial goals, it can seem like a daunting task. You might know what you want, but maybe you aren’t sure how you can use your finances as the driver to get you there. Make 2018 the year you start the ride towards your financial goals, with these 5 tips from WCA Financial Planner Robyn Hatch.
1. Plot out your timeline
Forget lists, mobile apps, spreadsheets and calculators! Make your goal setting a linear process by mapping out a timeline.
“A timeline is a great way to get your mindset into planning your financial future,” Hatch says.
“Using a five-year outlook is a common starting point.
“Ask yourself, do you have any holidays you’d like to take in the next five years? Are you wanting a new home or car? Are the children due to start University in that time?”
Take a broad brush look at your five-year future, and plot out the big ticket matters you will need finance for.
2. Put a deadline on it. And add value!
With your goals now mapped out in front of you, it’s crucial to place a time and value on each of them.
“Simply saying, ‘I want to go to Europe in the next few years’, isn’t going to get you there,” Hatch says.
“A more tangible goal would be ‘I want to go to Europe in three years from now, and I estimate the cost will be 20 k.’
By committing a time and a value to your goal, you are now in place to build steps towards it, and to ensure you are financially able to make it happen.
3. Find your bottom line
How much are you currently spending each year? What are your outgoings?
Make a list of all your major expenses, from current investment commitments, your mortgage, rent, debt repayments and car loan to name a few.
Now take a look at all your income, and compare.
“A good way to do this is to export the data from your bank account in 2016, into an Excel document, and assess from there,” Hatch says.
“Once you’ve established your bottom line, you’ve got a foundation to work from towards your goals.”
4. Evaluate your lifestyle
Are you happy with your current lifestyle? Or do you recognise you are spending more on it than you would like to? These are important questions to ask when it comes to breaking down your financial goals into actionable steps.
It may be a shock to realise you are spending thousands of dollars a year on eating out, but on the other hand you may value your gourmet dining experiences and want to continue with them.
“Finance is all about ensuring people can do what they want to do,” Hatch explains. “With clear goals and lifestyle values in place, you are best positioned to move forward with your financial plan.”
5. Create contingency plans
All good financial plans are subject to change. Nothing in life is certain. When looking at your five-year timeline, consider the things that may crop up that could interfere with you achieving your goals.
What do you have in place to cover you in the event that you lost your job? Became ill? Suffered a loss within the family? If your business were to be sued?
“This is where insurance plays a critical role,” explains Hatch. “It is important to ensure you have adequate covers in place.”
For more advice on insurances check out our blog on financial protection.
Finally, with clarity around your financial goals and aspirations, it’s now time to start the journey towards them. Engaging an accredited financial planner to support you along the way is an advisable way to continue the process. However, you must ensure your planner is someone you can trust and speak openly with, and one you are comfortable to share the ride with!