Updated: Mar 6
Setting goals is one thing; 85% of people already have their sights set on doing everything from saving more for retirement to paying off student loans. But transforming those dreams into reality is another thing.
When planning for the year ahead, you have to know where to aim.
No matter your income level, money is still finite, which means you have to choose how and when to use it, and for what. You often have to juggle priorities that sometimes work together, such as saving and/or investing for retirement. But other times goals can seem to conflict — like deciding between paying off debt or saving for an emergency fund.
Over half of Australians (54%) said ‘COVID-19 has forced them to change their 2021 financial goals’ compared to previous years, according to a new study by ME Bank.
In the study of 1,000 Australians, the top 10 most listed financial goals included:
Let’s face it: We all know where we want to be. That’s easy. Most of us would choose to be debt free and probably have a few extra zeros added on to the total we have in our checking, savings and retirements accounts.
The best place to start is by asking yourself some questions so you can really understand your goals.
Here are a few examples of questions you might want to ask:
Am I happy with my net worth?
What are my advantages? (Due for a raise, good health benefits, homeowner, great credit score, comfortable pension, etc.)
What are my disadvantages? (Worried about a layoff, paying off an old credit card, high mortgage or rent, etc.)
If I continue saving at this rate, when will I be able retire? (Or have enough saved for a down payment? Be able to afford vacation? etc.)
How much could I save if I put $10 more into a savings account every month? Or $10 a week?
What are your Financial Values?
Setting money goals is more than just a list of things that you want to achieve. Your financial goals should be very specific, measurable, attainable, realistic, and with a time limit. This is what you would call a SMART goal.
Picking one to three goals to focus on this year is a good launching point for your 2021 priorities:
Make sure you have an emergency fund. (How to decide the right amount.)
Have a plan to pay off debt with interest rates over 10%. (Here’s where we got that number.)
Bump up retirement contributions.
Start investing for short- and long-term goals.
It’s important to set financial goals because they serve as a guide for how you manage your money. For instance, if your goal is to save money and you’re committed to it, you won’t waste money on things that you don’t need. In a sense, it drives positive behavior change.
A financial plan isn’t just reserved for those with financial advisers or tons of money. A financial plan is for everyone. It is a document that details how you plan to reach your financial goals.
Your plan takes everything about your life into account, including your marital status, career goals and more! It’s ultimately your guide for accomplishing any of the subsequent goals that I’ll mention.
The great thing is that you don’t need a financial advisor to create a financial plan. You can come up with your own financial plan leveraging the same financial planning process as the professionals.
Your financial plan should always begin by answering the question, “What do I want my life to look like X years from now?” Once you’re clear on that, you can create a roadmap for your finances to support that lifestyle.
If you have no idea how you can start to better manage your money, plan your financial goals well, boost your money, invest it or start your business, the best thing you can do is invest in your Financial Education.
To achieve any goal you set yourself, it is important that you have discipline and commitment. It does not matter how much you want to achieve it, if you do not adopt those two words to your lifestyle and make your actions become a habit that constantly helps you achieve your goals.
To get the right advice and learn more about personal savings goals, talk to one of our team on 02 8313 8400.
*Information within this publication has been sourced from CNBC Financial and MeBank.com.au.