Many of those who seek to change their lives and move forward find they encounter roadblocks. These roadblocks, which come in the form of unnecessary fears and worries about what might happen next, can stop us from reaching our potential and achieving happiness.
Visualisation is a powerful tool that we all use every day, without realising it. It allows us to imagine anything we desire – such as the image of our favourite celebrity, or something we want to buy – and this technique can be harnessed by those who wish to visualise their future for more practical purposes too.
One way in which you can begin visualising your future is by imagining how you would like your life to look in five years’ time, ten years’ time, twenty years’ time, and so on. Financial well-being ultimately comes from achieving financial security and independence.
When you’ve reached a state of financial wellbeing, you’ve got to a point where you have a sufficient level of income for your lifestyle needs, enough capital to give you peace of mind and the knowledge that whatever happens you, your family and business are fully protected.
Most people have lifestyle goals that are directly related to their finances. So why is it then that some people have the ability to live the life of dreams and pass on their wealth successfully to the next generation, but others face the prospect of selling their home or worry about health and care fee costs, and leave behind a tax bill for their loved ones to deal with?
Tangible and realistic goals
Regardless of what life stage you are at, you are likely to have some short, medium and long-term financial and lifestyle goals. Setting tangible and realistic goals, following them, and tracking and reviewing your progress is the key to success in achieving them.
If you are married it makes sense for you and your spouse to both share the same financial and lifestyle goals. Otherwise, achieving them will be almost impossible. It’s important to develop your financial and lifestyle plans together, and review your progress together to make sure both of you are contributing to the same outcomes.
How much money will I need?
Determining what your short-term, mid-term and long-term financial and lifestyle goals are is the first step. This may include planning for that dream holiday, buying a new property, university savings for your children or grandchildren, and retirement savings. Once you’ve both agreed your financial and lifestyle goals, the next step is to determine a good estimate for how much money you’ll need for each of them.
Determining an accurate amount will involve clearly identifying each of them. So for example, do you want to pay for your children or grandchildren to have a private education? If you are saving to pay towards your children’s or grandchildren’s university fees, what percentage do you want to pay? Your retirement savings needs will depend greatly on the lifestyle you plan to lead once you are retired, as well as when you plan to retire.
What savings goals should I set?
It’s important to prioritise each of your financial and lifestyle goals in order of importance, and then determine how long you have to save or invest for each of them. Retirement could be many years away, but your short-term goals could be in a year or two. Next, estimate how much interest or capital gains you’ll expect to see from saving and investing your money. While capital gains, or growth, are never guaranteed, an estimated average can be used for these purposes.
When you set your financial and lifestyle goals, don’t just pick an ambiguous number. Look at how much you’re earning, what your expenses are, and determine how much you could realistically save or invest each month. You should have both a monthly and yearly savings and investment goal, and ideally they should align based on your overall total wealth solution.
Do I have sufficient emergency fund in place?
It’s no surprise that when life presents as emergency, it threatens your financial wellbeing and can cause tremendous stress. Are you currently living without a financial safety net? How would you hope to get by financially without running into a short-term crisis? If you don’t already have a rainy day fund in place, this should be the first savings goal on your list. Your emergency fund should be sufficient to cover at least six months of your outgoings. This should include all of your living expenses, and the expenses of any dependents you have.
Where should you keep your emergency savings? If you already have an emergency fund, how does it fit in with your goals? Being prepared with an emergency fund gives you confidence that you can tackle any of life’s unexpected events without adding money worries your list.
Do I know where my money is going?
Are you tracking your expenses? If you don’t know how much you spend in a month, that will seriously hinder your ability to budget. That’s why tracking your expenses is so crucial. Make a budget plan you can stick to. But making a budget plan and making a budget plan you can follow are two entirely different things. This is why tracking your expenses is important and it can inform your budgeting choices.
Ask yourself: How would I cope with unexpected car problems or medical bills? Do I know where my money is going? Am I in control of my spending? Have I prepared a budget plan? Provided you stick to it, a budget plan will help you keep on top of your spending and make sure you can identify wasteful expenditure.
Is my family protected if the unexpected were to happen to me?
We can’t predict the future. However, we can help our loved ones by planning for it. It’s not just you that your financial planning has an impact on. We all intend that our plans will come good. But, making sure that your family – or your business – can cope if you fall ill or were to die unexpectedly is something we can too easily put to one side.
Would my family or business find themselves unable to pay the bills if something were to happen to me? This is why it’s essential that your financial and lifestyle goals are fully protected to ensure that any outstanding mortgage and liabilities would be paid off, and your family would continue to receive an ongoing income if the worst were to happen. Should an unforeseen event occur today, am I adequately protected? If not, take action now.
What do I need to invest for? What do I want to invest in?
When it comes to building an investment portfolio, you should have specific aims that reflect your risk tolerance, time horizon or asset class preferences based on your financial and lifestyle goals. Do you have plans to buy another property, or to invest in a new project or business venture? Knowing how much of a role you want to play in selecting and managing your investments can help you choose the approach that aligns with your investment goals.
Your investing preference can also impact the investment products and offerings you might choose. If you feel you don’t have the time or experience to monitor your portfolio balances so they stay true to your original target goal.
Are your plans on track for the future you want?
You have meaningful goals. We can help you achieve them. No matter what you want to accomplish, our focus starts and ends with you. We’ll work with you to provide ongoing, comprehensive planning and advice to help you succeed. Speak to one of our advisers today by clicking here, and make sure your plans are on track for the future you want.