If we were to ask you what your goals are for this year, or the next three years, or the next ten years, what would you say?
- Should you be planning for retirement?
- Are you looking to grow wealth?
- Wanting to become debt free?
- Buy an investment property?
It’s pretty easy to come up with 5 different goals off the top of your head but if I asked you to tell me the underlying purpose of each goal, how achievable each goal is for you and how you would prioritise those five goals, it starts to get a bit more difficult.
We all need a plan, we all need someone to push us and guide us through life, sports, your job and just like everything else we need someone to guide us financially. This is what a financial adviser is for, your adviser can get a clear picture of your financial situation, they’ll want to know about your financial goals – what you want to achieve (e.g. pay off your mortgage or save for retirement) and then help you formulate a plan to achieve these goals.
GOAL BLIND SPOTS
As humans, we let emotions influence our thinking and decision-making, in all areas of our lives. It may be hard to admit but sub consciously most of the time our decision-making we generally rely on behavioural biases without even knowing.
When you set goals, these biases come into play.
Here is an example, if you went to a Christmas lunch and spoke to someone who had just achieved an early retirement, you are drastically more likely to say one of your top goals is to retire by 40. Same again, if you spoke to a number of people who own an investment property you are more likely to say one of your goals is to purchase a property, these are some examples of behavioural bias.
We tend to set our goals based on how we feel, what we have heard or what other people are doing. These mental shortcuts create your ‘goal blind spots’ causing you to overlook goals that actually have greater importance.
A financial adviser can guide you through this, they can help you stay on track with goals and determine your most important goals.
To promote more thoughtful goal-setting, you need to invest the time into thinking about what you want for the short-term, medium-term and long-term. Coming up with a “wish list” is easy, the hard part is prioritising your goals because, regardless of personal wealth and income, resources are limited and none of us can have everything we want. Think about the underlying purpose of each goal – why do you want to achieve that? How achievable is it? How would you rate it in terms of importance compared to your other goals? Don’t be vague. Set clear and precise goals as this will lead to better-refined priorities.
In the spirit of the New Year, we encourage you to set aside some time to properly review your goals and be aware of any behavioural biases that may be influencing your decisions. Then make yourself accountable.
This advice is of a general nature only and does not take into account your personal situation and all of your objectives, your financial situation or needs. Before making any decisions you should seek advice from a professional, qualified financial adviser.