I think many of us spend time thinking about personal goals – how we’d like our bodies to look, for instance. But what about our financial goals? Do you know how to save per month, or what you want your bank balance to look like? Do you have a specific retirement sum in mind?
Andrew Talbot of Avrio Wealth talks us through some goal-setting strategies.
Managing your financial fitness
For both physical fitness and financial fitness, it’s all about changing and keeping good habits. And it will always start with the why. Why do you want to change? You might want to get fit so you’re able to run a marathon, or just to feel better mentally. Personal finance, on the other hand, can be about improving your savings and having enough to feel comfortable if you’re retrenched; or saving enough to retire early. Both need a change in attitudes to do so, and similar habit changes can help you with this.
What do you need to do to achieve your goals? Does it mean losing weight, or do you want to add muscle instead? With financial planning, ask yourself the same question: how do you want to meet your financial goals? Do you want a better retirement fund, for example, or an extensive property portfolio?
You do need to have the right mindset to change – and you should always write down your goals and set out the plan to get there. For example how much to save per month. But the techniques can be interchangeable in concept. Here are some behaviours that can help.
#1 Set up an automatic process
You want money to automatically leave your current/checking account and go into your retirement or savings account. This automation will save time and effort. To use the personal fitness analogy, this could be replicated by creating a habit of taking the stairs instead of the lift, or changing your route to work to increase your walking distance. Both are easy to do, they don’t require a huge change in habits, and they can be replicated each day or month.
#2 Use the right strategy to reach your financial goals
Do you just go to the gym to do cardio? Or do you use weights? Perhaps you have a different strategy, like getting involved in team sports. For your finances, ask yourself what asset allocation you’ll use for your investments. Do you want to just have property portfolio through a buy-to-let portfolio? Or do you want to have equity/fixed interest split in your portfolio?
#3 Do a deep dive into your habits and behaviours
Keeping track of your calorie and food intake each day can help with getting fit. The personal finance alternative is to know what you’re spending on. For both of these, you can use an app to help you: track your food intake with a calorie-counting app, or track your spending with an expenditure app. Set a specific target on how much to save per month.
#4 Seek professional advice in both areas
A personal fitness coach will help you to get on track, as will a financial planner. Please remember, too, that you don’t hire a financial advisor because you’re not smart; you hire one because they’re not you. No one can see their own blind spots.
Remember, the ultimate aim is to be financially independent and comfortable.
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