The importance of goal setting
Control your financial future through setting realistic goals that you can achieve, says Yellow Brick Road’s Mark Bouris.
As a kid growing up, our family lived in the suburbs of Sydney. Just like any of my mates’ families, my parents had a goal of owning their own home so that they could retire and have peace of mind knowing that we’d always have a roof over our heads.
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What I learned from them was that having financial goals is important.
But it’s just as important to have the right target. Life changes naturally over time and some things – like property prices, life stages and economic factors – may be out of your control.
What you can control though is being able to set a financial target that gives you something to work towards – regardless of your income or financial situation.
Whether it’s finding your dream home, getting that perfect pair of shoes you’ve been eyeing off, or finishing off the home renos, when you have a goal, you’re more likely to reach it without distraction.
My parents retired and reached their goal of having that roof over our heads, but we were stretched in day-to-day living. Making sure you have the right advice when you set those goals, as well as during your journey, is vital. Be informed. Be focused.
Take control of where you’re headed. And most importantly, enjoy the journey along the way.
STEPS FOR FINANCIAL GOAL SETTING
STEP 1: IDENTIFY GOALS
Identify and write down financial goals in order of priority and break into categories (short term, middle term and long term).
For example, pay off your credit card debt, buy a new car, save for a down payment on a house, go on a holiday or plan for retirement.
STEP 2: DETERMINE ACTIONS
Determine what needs to be done on a regular basis to achieve goals. This means creating a budget to stick to.
STEP 3: EVALUATE PROGRESS
Evaluate your progress along the way.
Review how you’re going regularly to make sure you’re on track, and make changes if you need to.
STEP 4: REAP WHAT YOU SOW
Reward yourself when you reach the small targets.
TIP - SAVE YOUR PENNIES: Put 5 to 10 per cent of each pay check into a savings account that you don’t have easy access to.
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ACHIEVING FINANCIAL GOALS
MORE BANG FOR YOUR BUCK: Look into different investment strategies that might suit you best, such as interest-earning savings accounts, stocks, bonds, superannuation funds, mutual funds or personal investments.
BE DILIGENT: Make a budget plan and stick to it.
GET ADVICE: Work with a wealth manager to get advice on lowering monthly expenses and getting rid of debt. This will also keep you accountable.
RESEARCH AND LEARN: Read magazines or books about investing and surf the internet.
Mark Bouris is the chairman of Yellow Brick Road