Someone we can’t find on Google once asked, “If you don’t know where you’re going, how will you know when you get there?” Which pretty much sums up the benefits of goal setting.
January, depending on your financial behaviour in December, can leave you feeling either dejected or excited to tackle the new year with vigour. Either way, this is a great time to review your last years’ financial behaviour to gage where you are now and to mark a course for the rest of 2017.
Taking Your Financial Temperature
FNB’s Preenay Sathu advises conducting a reassessment of your financial status annually to get a clear perspective of where you are and to spot any areas that may need correcting. He shared the following list of areas to examine before you set your financial goals for the new year. These include:
1. Your spending habits. “Make a list of items that are not priority for you, yet dent your wallet.”
2. Your debt. Avoid taking on more debt, and focus instead on reducing debt and using any surplus cash to increase contributions toward your bond, or, “…saving for your child’s education.”
3. Your investment portfolio. Review your investments to ensure your portfolio has a balanced spread across equities, bonds, and cash instruments, according to your personal circumstances and savings goals.
4. Your retirement contributions and savings. “Check with your financial adviser if the annual premium increase is in place and sufficient to meet your goals at retirement,” says Sathu. He advises it’s also beneficial to assess if the tax benefits of your contributions to retirement funds are being fully utilised.
5. Your estate. Review your will to ensure it serves the best interest of your dependents and protects your assets.
The Mother Of All Goals
Andrew Carnegie, the richest man in America in the early 20th Century, said, “If you want to be happy, set a goal that commands your thoughts, liberates your energy, and inspires your hopes.”
The reason most people make resolutions they can’t keep, and goals they give up on, is that they don’t really know what they want. We can get so caught up in the daily grind that we forget why we’re doing whatever it is we’re doing. Our goals become a glorified to-do list without a big-picture goal, which is what Mr Carnegie was referring to.
Lelia Gowland, consultant, speaker, and writer, shared on Forbes that we should make goals that reflect what we actually want, not what we think we should want. She recommends making a list of 2016 accomplishments.
“These aren’t necessarily the moments that are impressive to others or would make it onto your resume. They’re the ones in which you were most fulfilled and in your element,” says Gowland.
The point of this exercise, is to get to know yourself and what drives you by looking at patterns in the previous years’ accomplishments. And then to do more of it.
Another awesome exercise we highly recommend is to write a letter to yourself from a year in the future, detailing a day in the life you actually want. Make it as detailed as possible. Look at it often. This is the only financial goal you need to motivate yourself in 2017. Once you know what you want, you can take on the to-do list.
10 Items For Your 2017 Financial To-Do List
- Get out of debt.
- Plan for an early retirement.
- Have a well-stocked emergency fund.
- Start creating multiple income streams.
- Have enough insurance.
- Be able to live on less than you earn.
- End any addiction to stuff. Like too much clothing.
- Plan to do work that you love.
- Get comfortable sharing your good fortune.
- Plan to leave your financial house in order upon your death.