Oran Hall Achieving your financial goals in 2023 and beyond
Many people find this a very sobering time of year when they reflect on the past year and plan for the new year and beyond. They set lofty goals with or without a compass to guide them, but success depends on the goals being practicable, the quality of the plans to realise them and the will to make it happen.
There are several types of goals: career goals, personal development goals, educational goals and financial goals, for example. Financial goals include establishing an emergency fund, creating an effective retirement plan, paying off loans, making large purchases and creating or growing an investment portfolio.
In a real sense though, goals that are not defined as financial goals often require some funding. Take the leisure goal of taking a vacation, for example. It will not happen if there are no funds.
While there are several categories of goals, it is true to say that a meaningful goal must be time-based; there must be a time by which a serious goal should be realised.
It is prudent to determine if a goal is short-term, medium-term or long-term, and goals must be aligned with each other as they must be components of an overall plan. While this establishes a sequence in which the goals are to be achieved, it is not necessarily a reflection of the importance of a goal.
A family might identify buying a housing unit as its primary goal, but this could be a long-term goal considering that it takes significant financial resources to achieve such a goal. What is important to such a family is that short-term and medium-term goals do not compromise the ability of the family to achieve the primary goal.
What makes it easier to achieve each goal is making it specific. In this case, defining the type of housing unit, its size and preferred location, for example, helps greatly in having a sense of its likely cost, thus making it easier to determine how much to save and invest. Being specific about the housing unit to be acquired by what time also makes it quite possible to assess or measure the progress being made in the effort to realise the goal.
For example, the family should be able to determine the stage the project is at, if spending is in line with it, and whether the remaining financial resources are adequate to complete the project, and on time. And, of course, it must be doable even if it is not outlandish.
In setting a financial goal, and any other goal for that matter, it is necessary to determine the current position for it is the starting point from which the time is set to achieve the desired result and what must be done and how much is required to do so. Priorities must be set and big goals must be broken down into smaller ones. This is helpful in measuring progress and keeping the focus on the end goal. Keep the eyes fixed on the result, monitor the progress and recognise success at each stage with a celebration.
Where there is failure or where progress is lagging, determine the cause and make the required adjustments even if this means modifying the plan.
Setting goals without a financial plan is a waste of time. A budget is required to determine the cost of the project and how it is to be funded. It is a critical tool in determining if it is doable at all, or at the proposed level, or within the time set. A budget is also useful in helping to determine the most suitable form of funding to use.
Setting goals is more than writing a to-do list. Nor is it a vague list of what is desired to be achieved. Given that resources tend to be limited and that wants and perceived needs tend to be so many, it is not hard to see that setting goals is about making choices with the view of improving personal well-being.
Outside factors like changes in the economy, natural disasters, sickness, the loss of loved ones, among many other factors, can conceivably interrupt even the best-laid plans. Bear this in mind and be prepared to be flexible and patient, and keep looking for the opportunities which even unfavourable conditions bring.
– Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.finviser.jm@gmail.com