Do you have financial goals? Not just a vague wishlist, like “I want to build my business to last” or “I should give more money to charity.” Those are more like hopes than goals. Financial goals help you set a course to the life you dream of living – and they outline the path that will actually get you there.
How can you set smart financial goals, and why do you need them? Let’s find out.
Why You Need Financial Goals
Every financial plan should begin with clear short-term, mid-term, and long-term goals. After all, you can’t make a plan for how to get somewhere if you don’t know where you want to go. Setting strong goals is critical because it increases your likelihood of success – 56% of American households with a plan report they’ve made good to excellent progress meeting their savings needs, while that number is only 24% for those without a plan.
The most powerful steps that you can take to significantly increase your probability of success are to put your goals in writing and to tell others about your goal. I can personally attest that the last step is the magic bullet. Your goal becomes like a magnet that you can’t help but be drawn toward. Why is this? I think there are two reasons. First, you are now accountable to others – you don’t want to be embarrassed if you fall short. Second, others help you with your goal!
Setting goals is even more important when you have wealth to manage. Your money needs a purpose – it’s not going to do much for your long-term financial planning if your hard-earned dollars are just languishing in a low-interest savings account. They need a job – what could that money be doing for you? This doesn’t just mean it needs to be earning income for you, but it also needs to be contributing to the life you’ve dreamed of living.
As my dad always told me, there are only so many hours in a day to work to earn money. To build wealth you have to figure out a way to make money when you are sleeping. Investing does this for you.
Financial goals also ensure that the way you use your money is aligned with your values. For example, if you have the desire to retire early to spend time with your children and grandchildren but you don’t have a strategy to do so, your financial life is not in line with your goals. On the other hand, if you value contributing to your community and have a goal set to donate a portion of your income automatically each month to a local charity, you’re on the right track to do good.
How to Set Smart Financial Goals
Now that you know how important setting goals is to your financial planning, how do you go about setting them the right way? There are a few key steps to take in setting goals for your financial future.
Find Your Inspiration.
What are your dreams for your life? Do you want to own a second home on a lake, pay for college for your grandchildren, retire early to spend time traveling the world, or create a succession plan for your business so what you have worked hard to build stays stable? Your wealth that you worked hard to build needs a job to do – so what do you dream of using it for? Set these goals on paper to keep them clear and commit yourself to them fully.
Outline Your Timeframe.
Your financial plan should have a mix of short-term and long-term goals. Increasing philanthropic contributions or purchasing a lakehouse are good examples of short-term goals – you’re looking to accomplish those in the next decade or less. These goals help you develop the confidence that you can achieve larger goals down the road, while also providing some more immediate gratification.
Your most important long-term goal should be saving for retirement. How much do you anticipate needing to live the life you envision when you retire, and how much will you need to contribute now to make that happen? And what do you dream of leaving behind to your children and grandchildren as your legacy, if that is a priority?
Set S.M.A.R.T Goals.
This is where you look beyond just the goal to map out the steps you need to achieve it. Your goals should follow the S.M.A.R.T. framework – they need to be:
Say your goal is to increase your charitable contributions. To make this a S.M.A.R.T. goal, you could decide to pick a target of $10,000 per year to contribute to a charity that’s close to your heart. How much will you need to contribute each month to make this happen? Can your cash flow and investment strategy support this goal? Will you need to automate the process so this goal doesn’t get forgotten when life gets busy?
Revisit Them Regularly.
Once you’ve set your goals, the journey isn’t over yet! You need to check in on your progress regularly to ensure you’re still on track to complete your goals in the timeframe you planned. You will want to regularly assess whether your goals are still aligned with your values and priorities – has something shifted recently, like a new direction for your business or the birth of a grandchild, that has caused a change in goals?
You’ll also want to look at the numbers to see if you’re still on track to achieve both your short-term and long-term goals. Are you making the progress you had hoped to make? Or do you need to tweak and adjust your goals or your financial plan to stay on target?
Finding the Right Financial Help
If you’re feeling lost when you start to think about financial planning, you’re not alone. There are so many factors to consider and strategies to map out, you might be struggling to commit to a financial plan and reach your goals.
This feeling of overwhelm keeps many people from acting. The more assets you have, the more complex it becomes. You can miss out on some important goals, such as buying that vacation home while your kids are still young enough to enjoy it and create lifelong memories.
Working with the right financial planner can help. You’ll learn how to set the right goals, build a realistic and comprehensive action plan, and have the right help to keep on your track and aligned with your values and goals for your future.
At the helm of Bartley Financial is Robert Bartley. Robert, who is a Certified Public Accountant (CPA) and a Certified Financial Planner (CFP®), has over 30 years of business experience and over 20 years of experience as owner of his own financial planning firm. At Bartley Financial, Robert has built a cohesive team where professionalism is valued alongside integrity. The Bartley Financial family strives to provide unmatched service to clients. They employ a fee-only compensation structure, so clients know that, at Bartley, they come first.
Robert and his team apply their expertise to the betterment of their clients, whether that means managing their investment portfolios, planning for retirement, strategizing taxes, or executing any other initiatives in pursuit of optimum financial health and minimal financial stress.
Consider enlisting the help of Bartley Financial’s team as you consider your financial goals and how to achieve them.