Everyone wants to achieve financial security and possibly high net worth. It’s why we go to work every day and put away savings for the future.
There is a difference, though, between vague financial dreams and specific, clearly stated financial goals. A hallmark of financial planning is to take dreams and shape them into clearly defined objectives that will guide you toward financial independence and retirement security.
Here are some tips to create a meaningful and useful set of financial goals:
Goals Are Guides.
You should see your goals as a set of guidelines to help you make financial and life decisions every day. For instance, if one of your goals is to save $5,000 for a down payment on a new car to provide safer transportation for your family, you are less likely to buy $200 tickets to a concert.
Be Specific.
In the previous example, it’s important to specify not only the amount of the down payment but also the make and model of the car you want, and how much money you will put aside every month to reach the total. If your goal is “to buy a new car” you’re much less likely to keep that goal in mind when you’re faced with spending decisions. This is called using SMART goals: Specific, Measurable, Achievable, Relevant and Timely.
Always Prioritize.
You may want to set a goal to save enough money to be able to afford frequent vacations after you retire. No problem, but you may need to list that as a long-term goal while first tackling short-term goals such as paying off debt. A detailed list of prioritized goals will help you know which tasks to perform and which to delay.
Write It Down.
Along with your family mission statement and budget plan, it’s important that you write down your goals. Separate them according to short-term, medium-term and long-term objectives, make them as specific as possible, and print copies. This serves not only to remind you of your goals, but the simple act of writing down goals appears to boost motivation and memory for most people.
Keep the Big Picture in Mind.
Your goals must serve a larger financial plan that includes tax planning, estate planning and retirement planning. A financial advisor will help you take into account all the different aspects of your personal life and your family life, putting together a comprehensive financial plan based from start to finish on your goals.
Review and Revise.
No one’s life follows a smooth trajectory. Things happen, both good (grandchildren, windfalls) and bad (layoffs, illnesses). Major life events should prompt you to review your goals and consider making changes if needed.
Eric Tashlein is a Certified Financial Planner professional™ and founding Principal of Connecticut Capital Management Group, LLC, 67 Cherry St., C-2, in Milford. He can be reached at 203-877-1520 or through www.connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor. Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., A Registered Investment Advisor. Cambridge Investment Research Inc., and Connecticut Capital Management Group, LLC are not affiliated.