I was recently out to lunch with friends and we were discussing what financial freedom meant to us. Whilst financial freedom means many different things to different people, planning for a secure financial future is something we should all be doing.
Financial freedom is about taking ownership of your finances. It is about having a dependable cash flow that allows you to live the life you want. That way you aren’t worrying about how you’ll pay your bills or sudden expenses and you aren’t burdened with a pile of debt.
Through proper financial planning and by setting financial goals you will be able to control your finances instead of feeling like they have control of you. Financial goals offer you direction and give you something to constantly strive for.
The very act of writing and rewriting your goals, and thinking about them each morning, will increase your chances of accomplishing them.
Below are my top 5 ways to setting financial goals:
1. Understanding Your “Why”
It’s easy to set a goal and never follow through on it. More often than not, it’s because we don’t really know the “Why” behind the goal. We don’t know why it’s important to us or why it will bring us closer to the life we want.
Without that “Why”, we don’t have a compelling reason to do the hard work necessary to follow through. By understanding what’s important to you it will provide you the motivation to achieve your goals. Some questions you can ask yourself are:
- Why am I setting this goal?
- Why is it important to me, and will it help me create the life I want?
2. Financial status check
Your financial health is important, just like your physical health. Doing a financial wellness check, can help you determine what adjustments you need to make in your life. Our finances can make or break us in many cases, so having an awareness of where we stand financially is critical.
By doing a financial wellness check, we’ll be able to determine what adjustments we need to make in our lives—from saving to spending to earning.
3. Setting your goal
The best way to achieve financial goals is to start with the SMART principle. You have probably heard of it before: Specific, Measurable, Attainable, Realistic and Timely – it’s the ideal formula to follow when setting financial goals.
Specific – Your goals have to identify exactly what it is you want to accomplish. The clearer your financial freedom vision is, the easier it will be for you to develop your overall plan and follow this goal.
Measurable – The key thing to always ask your self is this: How will I know when it is accomplished? The finish line needs to be as clear as possible.
Attainable – How are you going to achieve the goal and do you have the proper resources, tools, or skills needed to get there?
Realistic – You have to really think about what it’s going to take to reach this goal. Evaluating what you can realistically push yourself to achieve is important.
Timely – Great goals are time limited, in that they are completed within a very specific time frame. This provides some pressure to consistently work on a goal.
4. Creating a plan for your goals
A long-term financial plan will help you to reach your long-term goals and give you a focus for your short-term goals. This financial plan will vary from individual to individual, and this is where a financial adviser can help you solidify the plan. They will help you by creating a specific plan that suits your circumstances.
5. Take Action
Thinking about organising your finances will not help you achieve your financial goals. In order to get the results that you want, you must take action.
An action plan is a step-by-step method to get things done. I like to think of it as a plan of attack. It’s a way to break up huge, overwhelming tasks into smaller, more manageable ones. If you’re overwhelmed by the amount of work your goal will take, an action plan will make it feel achievable.
By setting goals and understanding the flow of your money – you can look at gaining some tangible rewards – and have your money work harder for you, as opposed to working harder for your money.
About Massey Financial Advice
I am a Brisbane-based Financial Adviser with more than 14 years experience working with professionals to achieve financial freedom. I have clients across Brisbane, including from Ashgrove, The Gap, Kenmore and Chapel Hill.
Sometimes people don’t really understand their financial situation – whether that be their personal cash flow, wealth creation or retirement plan, and this puts their lifestyle at risk. I partner with professionals so that they feel empowered to make the best financial choices for them, their family and their career.
A great first step to preparing for your retirement is to book a cost and obligation free Financial Gap Strategy Session by clicking the link below. This is a free phone call at a time that suits you to discuss what you are working to achieve and discuss how I may be able to help.
If you would care to share your experience with me, please comment below!