Money Talk Daily

Posts Tagged ‘financial freedom’

A lesson on goal setting and financial planning.

Successful financial planning is not about choosing the right pension, or selecting the right savings plan, it is about having the right mentality, and being able to follow a proven strategy from start to finish.

First you need to look at  goal setting. I would say that goal setting is about 25% of the financial planning process, and without doing this, the process will not work at all. Imagine a car with 25% of its engine missing. It probably won’t work, and this goes for financial planning too.

Goal setting is an important subject, and cannot be covered in full on this blog, but more details can be found on my financial planning website. There are also specialist books written on the subject of goal setting which are well worth a read.

 The basics to goal setting are as follows:

You should set a goal for your benefit only. Not for the benefit of others, although there is nothing wrong if your goal benefits others indirectly.

You should make your goal positive in nature.

Your goal should be specific. You need to be able to imagine every small detail. The vaguer you make it the less likely you are to achieve it.

You must be able to picture your goal.

An example of a good goal could be:

“I wish to retire on my 55^th birthday. I want to have enough money to live a fulfilled life which includes playing golf on a weekly basis at the manor executive club. I will play regularly so I can beat all of my golf buddies.  I want to afford to have meals out with rosemary (my wife) at nice restaurants. We would enjoy good quality meals such as roast beef and Yorkshire puddings, and steak in red wine sauce. I would also like to take 4 holidays per year. I would like to take three foreign holidays, and explore new and exotic places. I would like to be able to lie on the beach, seeing clear blue sea and white sands.  I want to enjoy a long and fruitful retirement, and the earlier I retire the more I can see and do.

An example of a bad goal could be:

I want to retire early with a good pension. This is because I don’t like working. But I cant stop working if I don’t have enough money because I will be poor and unable to live a good life. I don’t want to watch tv all day, and I dont want to retire too late in case I die young.

The first goal is specific, positive, for your benefit, and easy to visualise. The second goal is non specific, negative, and very difficult to visualise.

You should try and visualise your goals for 30 minutes per day. You should try and have between 10 and 20 specific goals at any one time. You should not restrict your goals to what you can easily achieve, but instead have goals which you dream of, and are out of reach because setting your sights too low guarantee you will under achevie.