When you think about the goals you hope to achieve, do you have a clear plan in place for the cost of doing so? Without a blueprint to follow, it can become all too easy for goals and opportunities to pass by whilst focussing on the day-to-day.
You might have a range of goals that you’re working towards, but it’s likely that at least a significant portion of these depend on your finances too. Whether you hope to support children through university or want to start retirement by travelling to exotic destinations, it’s money that will help you tick off these lifestyle aspirations.
Linking lifestyle goals with your financial plan has numerous benefits, including:
We’ve all set out a goal with the best intentions, only for the steps needed to reach it to slowly fall down our list of priorities. Whether you hope to make regular contributions to savings accounts, overpay the mortgage or boost your pension, without linking it to a goal it’s easy for it to be forgotten about.
Linking it to a lifestyle goal can provide you with the motivation needed. Making a sacrifice now, knowing it’s going to fund your dream to give up work can spur you on. Knowing that retiring early means keeping on top of finances can encourage you to engage with pensions and other assets more frequently.
2. Assessing how realistic they are
You might have a grand plan, but is it realistic? Working towards a goal that isn’t going to be achievable can lead to disappointment. When you’re setting out goals, taking a look at your financial situation can help you see how realistic they are. You might find you need to scale back or alter plans in some way, but, on the other hand, you may find you’re in a better position than you thought, and you can start dreaming bigger.
3. Put them into context
On top of understanding how realistic your goals are, the process can also help you put them into context. Whilst you might be hoping to pay off your mortgage ten years early, how will this positively influence your retirement plans, for instance? The answers can provide you with financial motivation to continue working towards the bigger picture. Alternatively, if you knew spending your savings on travelling for an extended period of time now would have an impact on your long-term income, would you still do it? Putting goals into context can help you set out a blueprint that brings together multiple aspirations covering the short, medium and long term.
Being able to track your progress and refer back to your initial goals, with an idea of how financial steps will help fund them, can boost your confidence. Sometimes, the effort you’re taking towards goals can seem abstract and there may still be concerns about how likely you are to reach them. But knowing you have a financial plan in place to support them can give you peace of mind when it’s needed.
5. Prepare for the unexpected
No matter how carefully we plan, obstacles and challenges will come our way. Linking your goals to your overall financial situation can help you reduce the impact of these. Building up a financial buffer can help absorb unexpected costs, while other steps, such as diversifying investments, can keep you on track even when things outside of your control happen. It’s not possible to predict what will happen in the future, but considering possibilities can help you create a robust plan.
Financial planning puts your goals and priorities at the centre of a financial plan. It’s an approach that can help you improve financial security and build the lifestyles you want, to discuss your aspirations, please get in touch.