One of our primary goals should be to have a comfortable retirement. Yet only 1% of us reach this goal.
Maybe you are saving something for a pension, but don't know how much you will need or whether you are saving enough each month.
That's like playing rugby with no goalposts; playing a game you can never win! We need to have something to aim for otherwise we drift along and leave our future to chance.
We need to have something to measure our performance against.
Set goals and give your life financial direction, purpose and vision.
The fact that we are living longer and will need more money than ever before in retirement, is reason enough to seriously consider goal planning!
Spend some time dreaming!Seriously, no real goal is impossible. Think about where you want to be in the future and what you want out of life, whether that be in 5-years or 50.
Then WRITE them down. Do you know that the second least frequently performed financial task by people, is not having a written financial goal plan? (And the first; not drafting a current will).
Read up about goal setting. There is a wealth of information on the Internet.
Your goals can be both financial and personal;
Goals must be understandable and measurable, especially a time-frame.
Don't make your goals too vague.
Just what does a comfortable retirement mean to you?
Qualify the word comfortable and so on.
Use affirmative words like I'm going to, I am or better yet, I see myself.
You may want to involve others who have a direct bearing on your future. A family's financial goals must involve and be agreed by the family members, otherwise conflict may arise.
Divide your goals into short-term (less than 1 year), medium-term (up to 5-years) and long-term (more than 5-years).
Next revise your goals and prioritise them.
You only have so much spare money to invest in your goals so you need to prioritise which ones are more important. Make two lists, one your primary and one your future goals.
Delete goals that you don't really want or need. This is not easy. You may find that some goals are unrealistic when compared to others.
The money you need for minor goals may be well-spent in other, more important goals, like retirement savings.
Prioritise goals by the time you need to achieve them and then by their overall importance.
Consider your available money. For example; you may want to pay off your bond before retirement (excellent strategy!) But do you scale back on your retirement savings in order to do this?
The choice is yours. You will find you need to sacrifice some goals in favour of others.
Don't land up having too many goals that you need to reach at the same time.
Estimate a cost (in today's value) and a time in which to get there.
For example; Save for John's university costs - need R45,000 by 2015.
Expand your plan for achieving each goal. Using the university fund as an example;
Set a date at which to review your goals. Do this at least once a year.It is important to have short-term goals as you will get a tremendous feeling of satisfaction crossing them off as done!
A suggested strategy...
Goal setting is not to be taken lightly. Goals are extremely important in determining the your best financial planning strategy.
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