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Setting financial goals

By Louie Butlin

  • Financial Planning

Money worries can have an impact on mental health and well-being. Without a clear roadmap, it can be challenging, stressful and confusing when trying to achieve your financial goals. By creating a strong financial plan and setting clear and attainable financial goals, you can effectively manage your resources, prioritise your spending, and make informed decisions that will set you up for long-term financial security.

The importance of setting financial goals:

Setting financial goals is crucial for several reasons. Firstly, it provides a sense of purpose and direction to your financial journey. Without goals, it’s easy to fall into the trap of living payslip to payslip or making impulsive purchases that derail your progress.

Secondly, goal setting helps you prioritise your financial decisions and allocate resources effectively. It allows you to distinguish between needs and wants, ensuring that you focus on what truly matters.

Lastly, setting financial goals empowers you to measure your progress and celebrate milestones along the way, keeping you motivated and inspired.

Defining your financial goals:

To start your journey towards financial success, it’s essential to define your financial goals clearly. Begin by examining both your short-term and long-term aspirations.

Short-term goals may include; creating an emergency fund, paying off debts, or saving for a specific purchase. While long-term goals may involve; retirement planning, buying a house, or putting away money for your children’s future.

Be specific and realistic when setting your goals, making them measurable and time-bound. For example, instead of saying, “I want to save money,” set a specific target such as, “I will save £20,000 for a deposit on a house within the next two years.”

Breaking down your goals:

Breaking down your financial goals into smaller, manageable milestones is crucial for making consistent progress. Divide your goals into actionable steps that you can tackle one at a time. For example, if your goal is to pay off a significant debt, create a plan to allocate a certain amount towards repayment each month. By breaking down your goals, you’ll feel a sense of accomplishment with each milestone achieved, reinforcing your commitment to the larger objective.

Creating a realistic budget:

A budget is an indispensable tool for financial goal setting. It helps you track your income and expenses, identify areas where you can cut back or save, and ensures that you’re on track to achieve your goals. Analyse your spending habits and make necessary adjustments to align with your financial objectives. Consider using budgeting apps or spreadsheets to simplify the process and gain a clear understanding of your financial inflows and outflows.

Regularly reviewing your goals:

Financial circumstances and priorities may change over time, making it crucial to review and adjust your goals periodically. Life events such as; career advancements, marriage, or having children can impact your financial goals.

Set aside time every few months to evaluate your progress, assess any challenges, and make necessary adjustments. This flexibility will enable you to stay on track and adapt to changing circumstances effectively.

Seeking the help of a Chartered financial planner:

If you’re unsure about how to set or achieve your financial goals, consider seeking professional advice. Financial planners can provide valuable insights, tailored to your unique situation, and aid you in creating a comprehensive financial plan that aligns with your goals. They can also offer guidance on investment strategies, tax planning, and other financial matters that may accelerate your progress.

Our team at LIFT are some of the most highly qualified within the industry; many of them hold Chartered status and are also Fellows of the Personal Finance Society (PFS). Having Chartered status within this industry means we are at the gold standard, allowing our clients to have the reassurance that they’re in expert hands.