While the end of the year is often the time to think back over the last 12 months, it’s also the time to “look to the future now” as Slade reliably inform us each Christmas!
New Year resolutions are an obvious manifestation of this. But going beyond that, it’s well worth you considering setting yourself some longer-term goals – particularly from a financial perspective.
Having these can help you manage your money, because they’ll prompt you to see that every decision you make affects your long-term financial health.
It’s important to set yourself the right goals
If you’re minded to set yourself some financial targets, there are some key pointers you need to consider.
You should make your goals specific and achievable
High-level financial objectives are fine in themselves, but actual stated goals, rather than vague aspirations, are easier to achieve. You should also make sure you’re setting yourself goals that are realistic, and relevant to your personal circumstances.
Ensure you can check your progress
Once you’ve set a specific goal, you’ll need to know you’re on track to achieve it. Otherwise, it’s easy to lose heart and forget all about it. So, make your goals measurable – for example, you want to save a certain amount within a defined period.
Give yourself time-orientated targets
As well as being measurable, your goals should also have a timescale within which you’re aiming to get them done.
It’s too easy to kick the can down the road when it comes to objectives, especially if it’s an uphill task that will take some commitment. Also make sure your goals are challenging but not too arduous.
Make sure your goals are personal and relevant to you
You’re likely to read about suggested goals and resolutions in the financial media at this time. Many of them will be relevant, but the best are ones that have specific relevance and meaning to you and your family.
Your goals will be personal to you, and you won’t necessarily be able to set them all at the same time.
Read three ideas for financial goals to help get you starting to think about yours.
1. Clear your debts
Debt is about your past, and you can’t look confidently forward to your future until you’ve cleared yours, or at least got them under control.
Excessive debt can be draining and stressful, and that stress can easily translate into behavioural and health issues if it starts to become a big problem.
The simple step of aiming to clear your debt by a certain time and putting a clear and achievable plan in place can help you sleep easier at night and improve your mood.
You should give yourself a time frame, but make sure it’s achievable.
Bear in mind that there’s little point in saving or investing money (beyond your pension contributions) while you’re paying double-digit interest on credit card debts.
Target the highest interest debts first, and then work through them one by one until they are eliminated. Balance transfer offers for nil-interest over a fixed term can be useful, but you need to manage them carefully.
Clearing your debts will not only give you peace of mind, but will also free up money each month that you can put to better use.
2. Take control of your finances
While clearing your debt could entail long-term planning, taking control of your finances is something you can start to achieve straight away.
So, take steps to make sure you know:
- how much you’re spending each month, including both regular outgoings and discretionary spending;
- the amount you’re saving and investing on a regular basis;
- how much debt you have; and
- what future spending commitments you have.
A simple spreadsheet is a good place to start, and you’ll be able to find a lot of the details to begin populating it from online statements and provider websites.
Once you have a clear idea of your income and expenditure, you can then start budgeting, and fulfilling your financial priorities.
Keeping up to date will then just involve checking your spreadsheet regularly and maintaining it as your circumstances change.
3. Set your retirement goals
Once your debts are cleared, and you have your finances under control, you’ll then be in a strong position to start thinking seriously about your longer-term future.
A key part of this will obviously be your plans for what you want to do when you stop working.
Setting goals for your retirement, from what you want to do to where you want to live, is a key first step.
Once you have those in your mind, you can then consider how much you’ll need in your pension fund, and other savings, in order to fulfil these aims.
This will translate into a tangible financial goal that you can then start working towards.
Get in touch
If you’d like to talk about your own financial goals, then please get in touch.
You can call me on 07769 156 250.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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