5 financial goals and how to achieve them

“A goal without a plan is just a wish.” Antoine de Saint-Exupery, author of The Little Prince.

Most of us would agree that it’s important to set goals and make plans to achieve them. We do it all the time. For example: Goal: lose 10 kilos. Plan: exercise more and eat less (usually hatched halfway through a bottle of wine and a cheese platter).

But financial goals – which can be the biggest, most life-changing goals of all – are all too often put on the back burner.

Working out ways to set up a business, retire early, or build a multimillion-dollar investment portfolio can all seem a bit too hard, especially on those wine and cheese nights.

However, it doesn’t have to be that way. With a bit of help, financial goals can be set, plans can be put into place, and everlasting happiness attained (or at least a nice little nest egg). Here are a few ideas for some financial goals worth setting, and how we can achieve them.

At the end of the day, you may be glad you gave it some thought. Because, in the wise words of English football commentator, John Motson: “The goals made such a difference to the way this game went.”



Create a plan

Goal No.1: Start a business

Plan:

  • Understand what’s involved. OK, so you may have a killer idea, but it’s a long road from drawing your automatic cat washing machine on the back of a napkin to floating on the stock exchange. Setting up a business is not for the faint-hearted. So do some research. Visit business.gov.au and download the ASIC MoneySmart First Business app to help you work out if you’re ready.
  • Develop a business plan. Do the numbers stack up? There’s only one way to find out: get down to the nitty-gritty of set-up costs, cash flow projections, and balance sheets with a business plan.
  • Develop a marketing plan and a digital strategy. It’s the 21st century. You’re going to need these.
  • Talk to the bank. Or investors. Or both.
  • Do the legal stuff. Choose a business structure, get an ABN, register your business name and so on…
  • Get advice. There’s lots of advice available for small businesspeople, including from government-funded business advisers. A financial planner may be able to help with advice on business insurance, corporate super and group insurance.

Goal No.2: Grow your investments

Plan:

  • Be specific. “Grow your investments” is a bit vague. Work out what you want to achieve. If you’re 21 or 65, rich, poor or somewhere in between, your investment goals are likely to be different.
  • Add it up. Look at your existing assets. If you want to develop a balanced portfolio and an effective strategy, it helps to know where you’re starting from.
  • Learn what your options are. There are so many choices when it comes to shares, property, bonds and so on that it can all get thoroughly confusing. So educate yourself. ASIC’s MoneySmart website is a good place to start. As is the ASX’s education centre.
  • Get advice. When it comes to developing an investment strategy that will help you achieve your goals, a financial adviser can be invaluable.



Protect your family

Goal No.3: Protect your assets and income

  • Prioritise. Ask yourself which insurance policies are the most important to you. Income protection, life, disability, trauma, medical, and home and contents insurance are high on most people’s lists.
  • Assess your current insurance levels. The “she’ll be right, mate” attitude has left Australians horribly underinsured, with the median level of life cover meeting only 61 per cent of basic needs, according to a 2015 study. Ask how your family would cope should one of the breadwinners lose their job, get injured, or worse.
  • Get advice. A financial planner can provide advice on personal insurance such as life, TPD (total and permanent disability), and income protection.

Goal No.4: Boost your super

Work out how much you’ll need. In 2017, a 65-year-old retired single person would need an annual income of $43,365 for a comfortable lifestyle, according to the Association of Superannuation Funds of Australia retirement standard (assuming they own their home outright and are relatively healthy). A couple would need $59,971. Use a calculator to find out how much you might need.

Work out the best ways to boost your super. If you’re still working, it may be wise to make hay while the sun shines and boost your super. You can do this by making extra contributions in various ways, including salary sacrificing and seeking government co-contributions. You might also consider consolidating multiple super funds into one account (this can save on fees, but watch out for losing any insurance policies you may have in funds that you close).

Get advice. A financial planner can help you develop an effective super strategy.



Future thinking

Goal No.5: Prepare for retirement

Work out your retirement income plan: Will you withdraw all your super when you retire? Leave it in the fund and set up an income stream? Or a combination of the two? Maybe you want the security of a regular payment from a guaranteed annuity. And where will the Age Pension fit in to all this?

Will you still work part-time? If so, maybe you should take advantage of the transition to retirement rules, which allow you to top up your part-time earnings with an income stream from your super.

Get advice. ASIC’s MoneySmart website can help with general advice about retirement income planning. A financial planner can get down to the nitty-gritty of your personal situation and work out what’s best for you.

Help!

Of course, you can make plans on your own. But a financial planner can make the process a lot easier and the plan a lot more effective. A good financial planner will keep up to speed with any legislative changes that might affect your financial future. And if you want them to review your situation regularly, they can do that too, as an additional service, to make sure you keep kicking those goals.

Book a conversation with a financial planner at Commonwealth Financial Planning today.

This article contains general advice only. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial planner before making any financial decision based on this information. This document has been prepared by Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, (Commonwealth Financial Planning) a wholly-owned, but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning.

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