WHAT IS YOUR NEW YEAR’S RESOLUTION?
The new year is a time when we often hear others speak about their new year’s resolutions, what is your new year’s resolution?
Lose weight? Give up smoking? Give up gambling? Give up the booze? Save money? Buy a house? Or even retire?
Why not try something a little different this year & get your finances sorted in 2022.
Resolutions are about forward planning, and when it comes to money there is nothing more powerful than planning.
It’s a New Year’s resolution that you will not only thank yourself for, but something that will directly benefit your family and their future as well.
Having your finances sorted can provide you with more choices for how you live your life both now & in retirement.
There are some important steps you need to take to achieve a clear vision for your future in 2022. They include:
Vision
What do I really want?
Values
What is important about it?
Methods
How will I get it?
Obstacles
What is preventing me from having it?
Measurements
How will I know I am successful?
SET GOALS (VISION & VALUES)
Many people live day to day, week to week, without thinking of the future.
As humans we are wired to choose today over tomorrow, but we also hate to feel like we are missing out on something.
A recent research study was conducted with monkeys.
5 monkeys were given a banana each – and high levels of excitement were measured.
5 other monkeys were given 2 bananas each – and high levels of excitement were measured.
However, when a change was made, and the monkeys with 2 bananas had one taken away, they still had 1 banana, but they became angry and irate.
Does this happen to us?
Do we forget what we already have?
If we feel like we are losing something, then we avoid it, we don't do it.
This is why so many people do not save & invest.
Saving sounds like you are giving something up or losing something today.
But you’re not. It is giving yourself a gift today of peace of mind, certainty, of a secure financial future.
Therefore, those that choose today over tomorrow, often find themselves at the cusp of retirement realising that they will not be able to continue their current standard of living. This is not a fun place to be and can cause a lot of stress and uncertainty. By having a goal and a plan for your financial future can help alleviate stress both now and in the future.
Choosing your goals or knowing where you want to end up is a crucial part of setting your vision. They help lay the steppingstones to success.
When it comes to our financial lives, common goals are often “save for a house deposit”, “get out of debt”, “sort out my super”, “save for retirement” or “pay for our kids education”.
These are all fantastic goals.
However, in our experience, we have found when people attach their values or why this particular goal is important to them, it provides more meaning and increases the probability of achievement. Most of the time past experiences and individual filters will be placed on each goal. For example, I was not given the opportunity to go to a private school & I want to give my children every possible chance to succeed in the future by paying for their education. Or my parents are living off the age pension in retirement, I do not want this to be me. Or even, my friend had to set up a GoFundme page when he got sick, as he had no insurance, and I am too proud to have my family begging for money so I want to put insurance in place to support them.
What is important to look at is what type of lifestyle aspirations you want to achieve. Everyone has different goals and that is ok.
Money doesn’t buy happiness, but it does buy choices and choices are something that you want at all stages of life.
GET HELP MAKING YOUR PLAN (METHOD)
How will I get there?
Now you have your goals outlined & why they are important to you, it is time to start building the plan around this to map out how you will get there.
Much like a GPS – you know where you are now, you understand your final destination & now you have to work out the best route to get there.
Many people will opt to do this alone, however if you have had these goals for a number of years & are yet to achieve them, it may be time to bring someone else in to support you & keep you accountable.
Generally most people seek advice & support from family members or spouses, however your finances and goals can be very personal, where you may not want to share your goals or financial situation with your family.
The alternative is to outsource this to a financial advisor who can provide expert advice, support & guidance. This is their job that they do day in and day out. They have the experience of hundreds of clients before you, they understand what works and what doesn't work. You can also lean on them to avoid mistakes as you only have one opportunity at life and you want to ensure you get it right.
However you look to build you plan, ensure it has the steps to get you to achieve your goals.
WHAT IS PREVENTING YOU FROM REACHING YOUR GOALS? (OBSTACLES)
Most people will understand what or who will prevent you from reaching your goals. So putting a plan in place to mitigate these obstacles will be critical to reaching your goals.
However, we need to be mindful that throughout life, markets, inflation, incomes, goals & your health changes. In short, life happens.
Your blueprint or financial plan needs to be fluid. A plan that sits on a shelf couldn’t possibly account for all that life throws at you, so we partner with you & adjust our strategies to accommodate as your life changes.
Over the past 17 years providing advice, we have seen people’s pasts or history hold them back in achieving their goals. Whether that is experiences, language used by friends or family, or even how you value yourself all play a major factor on you achieving your goals.
For 2022 we have teamed up with Grand Mind Design whom look to unpack all these things that are holding you back.
We have been through the program ourselves, which includes: identifying and removing limiting beliefs, hypnotherapy & time line therapy.
This program is looking to add the extra one percent to support you in achieving your goals.
We understand, like financial advice this type of program is not for everyone, it is really focused on those people that feel stuck or feel like something is holding them back and are ready to let go of the past.
HOW WILL I KNOW IF I AM SUCCESSFUL? (MEASUREMENTS)
It is fantastic to have a goal, but what gives them more power is to quantify them.
By making your goals quantifiable they are measurable.
Instead of “I want to get out of debt” quantify it – “I want to pay off my $7,000 credit card debt in the next 12 months”.
Instead of “I want to save for retirement” quantify it – “I want to have $70,000 a year to live off in retirement”.
Instead of “I want to pay for my kids private school fees” quantify it – “I want to save $140,000 over the next 7 years to pay for kids school fees”.
Measurable goals also enable you to be able to break them down into smaller bite size pieces or steps. In the credit card example, you could then look at what you need to pay off each month to reach your goal.
PROTECT WHAT IS IMPORTANT TO YOU
An important part of having a clear plan is knowing that you and your family are protected if something was to happen to you.
Most Australians are good at insuring their house, car & pets, but they seem to miss the fact that their greatest asset is really their ability to earn an income.
The primary “money machine” in your life is you.
You may have some investments, but if you stop working, the machine stops, the cashflow stops, and your income stops.
Basically your financial world comes to a grinding halt.
It’s zero sum game, meaning that you get back just what you put into it.
If you stop working, you stop making money.
Therefore, if your investments assets are not yet built up to replace your income & your ability to work was taken away how would you support your family?
Personal insurance can protect your income earning ability and provide security for the future. Some people think that they can’t afford personal insurance, but many can be paid for through superannuation. Not all insurance policies are the same, so it is important to get expert advice to know that you are effectively covered in the event of a life changing incident or illness.
