How to Set Financial Goals? with Laura Newman
How to Set Financial Goals?
💸 It’s time to Spring clean your finances! Today's episode focuses on setting financial goals for yourself. Only one in six Brits (17%) confess to having no defined financial goals, and 80% haven't discussed their financial goals with their bank.
Laura Newman, Head of NatWest Premier Financial Planning, shares insights and tips on the timing of setting financial goals. She suggests now is a good time for a financial Spring cleaning, eliminating unnecessary direct debits and subscriptions while focusing on clear future objectives.
We discuss how to set financial goals, prioritise them, and determine when to review them. We explore the importance of designing the life you want to live.
#AD: This episode is sponsored by NatWest Premier. Whether it's discovering ways to make your money grow, or planning your next new goal, your Premier Manager will help take your money to the next level so that it serves all your needs.
***
You can listen (23 min) and subscribe here:
***
Goal Setting
Kicking off the episode, Laura clarifies that setting financial goals is crucial because it gives you something to aim for, a destination to strive towards. People who set specific goals, write them down, and work towards them are likelier to achieve them.
Visualising these goals helps individuals stay focused and motivated, even when faced with obstacles along the way. Exploring different methods, like mood boards, is helpful to translating those grand visions into reality.
Then, Laura highlights the strong correlation between building wealth and setting financial goals. She draws upon the saying, "If you fail to plan, you plan to fail." When you establish specific goals, such as buying property or securing financial stability for retirement, you are better equipped to visualize your desired outcomes. Laura elaborates on the importance of picturing your retirement, considering what you truly want to achieve and experience during that phase of life.
By setting clear objectives, you pave the way for generating wealth and increase your likelihood of achieving these financial milestones.
“What we do find is when we talk to clients, and they haven’t really got anything in mind in terms of a specific goal in terms of what they want to achieve, as I said, purchasing a property, university fees, school fees, or school planning or whatever, they don’t then tend to achieve it.”
visualisation and mindset
When it comes to money, people often want more, but why? The reason is to achieve specific goals. These goals make us feel secure and independent, guiding our life plans. Without clear goals, it's hard to succeed financially. But setting specific goals and imagining reaching them makes success more likely.
Setting money goals can be hard, especially alone. Many people struggle to say what they want because they're unsure about the future or feel overwhelmed. But having the right attitude, or mindset, is key.
There are two main mindsets: a growth mindset and a fixed mindset. A growth mindset sees challenges as chances to learn and doesn't give up easily. A fixed mindset fears failure and avoids change. Having a growth mindset helps you develop good money habits and handle life's ups and downs better.
So, how can you start thinking more positively about money to set goals effectively? One approach is to face reality and focus on planning for specific goals. Instead of taking big risks, try taking small steps along the way. If you try to leap too far ahead, you might become discouraged and fall into a fixed mindset. Breaking things into smaller tasks allows you to achieve small victories and work toward your bigger ambitions. Taking things step by step is key.
practical steps to goal setting
Breaking goals into smaller steps is a great strategy to combat procrastination. Find a quiet time and space, away from distractions, and grab a pen and paper. Take it one step at a time to improve your life.
Starting may seem daunting, especially if you're stressed about money. But find a calm moment, maybe at a café or somewhere away from home, and dedicate an hour to working on your goals. Don't worry about judging them; write.
For those unsure where to begin, common financial goals include building an emergency fund, paying off debt, saving for retirement, striving for home ownership, starting a new business venture, planning for education expenses, saving for future fun activities or trips, considering medical expenses and long-term care, and leaving an inheritance or making charitable contributions.
Laura stresses that it is natural to feel overwhelmed when faced with multiple goals. To prioritise, she suggests categorising them into essential, important, and aspirational goals. Essential goals include building an emergency fund, saving for retirement, and preparing for healthcare costs. Important goals align with your core values and may include paying off debt or saving for a home. Aspirational goals are less urgent but represent your long-term dreams and desires. By breaking down your goals and focusing on what's most important to you, you can progress toward financial security and fulfilment.
Don’t forget that when it comes to your goals, they can cover a range of things, like saving for your child’s education, buying a home, paying off debts, or leaving something behind for your loved ones. Then there are those big dreams, like owning a second home or taking an amazing family trip. These might not be urgent, but they're still important to you.
To handle your goals well, you can sort them into three groups: essentials, important ones, and aspirational. But don't overload yourself with too many goals—it's better to focus on just a few.
Then, to help you actually reach your goals, you can use the SMART methodology: Specific, Measurable, Achievable, Relevant, and Time-Bound. First, be clear and specific about what you want. Make sure you can measure your progress along the way. Set deadlines for yourself, so you know when you want to achieve each goal. And make sure your goals are realistic and matter to you.
It's also helpful to write down your goals and share them with someone you trust, like a friend or a financial advisor. Having someone to cheer you on can really keep you going when things get tough.
And if you're planning for retirement, there are tools out there, like retirement calculators, that can help you figure out how much you need to save.
Remember, working on your money goals might feel overwhelming at times, but taking small steps and getting support can make it easier and more rewarding in the end.
the importance of flexibility
Being flexible with your financial goals is crucial because they can and will change over time. Don't stress about sticking to the same goals forever; you can always adjust them. Life is full of twists and turns, and it's okay if things don't go as planned. For example, if you decide to leave the corporate world and start your own business, it can affect your finances.
You might need to dip into your savings to fund your business, and it might take time for your business to become profitable. During this period, you might not be able to save as much for retirement or other goals. And that's okay. Life is full of ups and downs, and you should review your goals regularly to adapt to your current situation.
Laura recommends reviewing goals annually. This allows you to stay on track and adjust your goals as needed. Laura also points out that there are roughly five life stages to consider: formative stages, building the foundation, early accumulation years, rapid accumulation years, and financial independence.
Finally, it is essential to remember that life doesn't always follow a linear path. You might come across unexpected challenges or opportunities that require adjusting your goals. And that's perfectly okay. Your financial journey is unique to you, so make sure to review your goals regularly and adapt them to your current circumstances.
****
RESOURCES:
Previous podcast episodes with Laura:
