The Importance of Setting Goals
Welcome to My Financial Bridge, a collaborative tool for individuals to manage, store and share information with their trusted advisors. According to the CFP® www.LetsMakeAPlan.org website, “Creating a financial plan helps you see the big picture and set long- and short-term life goals, a crucial step in mapping out your financial future.”
In our 20th year serving clients and developing financial plans, we see the value of financial planning but also see many people struggle to clearly define or give enough time to setting goals. From our experience, those who are clear in what they would like their money to do for them are the most successful and least stressed about living and enjoying their personal lifestyle. Defining goals can give one purpose and focus as well as satisfaction once achieved. Wandering about and reaching an unplanned point may offer a pleasant surprise but just as easily it leads to just more wandering.
Financial goals shouldn’t be limited to and in fact aren’t material goals. The most powerful goals are those that challenge you to think what you most enjoy in life and how you can experience and share those feelings.
Ask yourself questions of what has made you happy to this point in your life and what you feel would make you happy in the future. It doesn’t have to be huge reach goals like buying a beach house one day but can be getting the family together over the years even as they grow, move away and start families of their own. Maybe you succeed in holding those memorable gatherings at a beach house you own. Maybe you manage to provide a venue and ensure all can travel home in order to be together and stay connected. Both goals require the use of financial resources and neither will just happen on their own. You’re more likely to achieve something if you set a timeline, an anticipated price and then prepare.
The more one can break their financial needs into pieces rather than just a total annual income amount, the easier and more powerful financial planning can become. By defining the cost of needs—the elements in life you must have such as shelter, food and clothing—and the cost of wants, which include distant travel, a second home or other luxuries, goals can be prioritized.
Once goals are ranked by importance, financial planning can help to determine whether or not you are making unnecessary sacrifices today or taking unneeded risks in order to achieve the lifestyle outcomes you’re seeking.