As we enter the New Year, it’s a good time to take a moment to think about how you’re going to plan for your finances this year. Have you thought of some financial goals that you’d like to achieve?
Why is it important to set financial goals and plan ahead? If you know what your goals are, then you can start to build a plan to meet them. Think of it like setting the foundations down before you build a house.
Many people are prompted to contact a financial planner when they are faced with a big life change. For example, a loved one has passed away and left an unexpected inheritance or you’re getting married and are starting to think of how to combine your finances. Although these are good reasons for getting in touch, we feel that it’s important to plan in advance of these events. A good financial planner can help you to take a look at the whole picture and use their expertise to help you to create a strategy to protect you and your family and to help you prosper in the future.
Financial planning helps you to answer questions like ‘Have I got enough?’, ‘What will my future look like?’ and ‘Am I going to be financially OK?’. But in order to answer these questions you need to work out what your goals are.
So how do you set your goals?
The best first step is to write them down and get your thoughts all in order. You don’t need to write the list all in one sitting. Use the notes app in your phone or have a notepad on the kitchen table and make a note when you think of something.
Make sure that you are being specific about what you want to achieve. You won’t get far if you’re too woolly. Instead of saying ‘I want to be better at handling my money.’, try thinking of the reasons why you don’t think you’re good with money and work back from there. Do you have a habit of spending beyond your means? Is it too tempting to put another purchase on the credit card?
Once you know what your goals are, make sure they are measurable. So, if you’re in the habit of spending beyond your means, set yourself a budget and make sure you stick to it. Or if you want to break your habit of putting purchases on your credit card, set yourself the goal of only putting a set amount on your card each month so you can pay it off more easily.
Set a deadline and be strict! If you set the deadline too far into the future, there’s no pressure to complete it. Make it reasonable and make sure you can meet it.
Focus on yourself. It’s easy to get caught up in what other people are doing and what they are planning for themselves. But remember that these are your finances so it’s only your thoughts that matter. For example, just because other people are re-mortgaging so that they can go travelling in their retirement doesn’t meant that you have to as well. Don’t be influenced by other people’s choices, focus on yourself.
Some goals that we would recommend you consider are; creating a budget, building up an emergency fund, getting yourself out of debt and trying to save for your retirement.
Once you have an idea of what you want your financial goals to be, get in touch and we can help you to form those ideas into a plan for your future.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Ethical Futures llp is authorised and regulated by the Financial Conduct Authority.