As we move further into 2023, many of us have set financial goals that we would like to achieve this year.
While this is an important first step, simply having goals is not enough. It is essential that you are taking appropriate action to make your goals a reality.
We’ve curated a list of tips that will help you reach your financial goals and ensure success for your long term financial future
1. Review your current financial position & understand your cash flow
Before you establish your goals, it is important to understand where you are right now. Whilst the average person might be able to tell you their next pay date or when some bills are due, very few have a clear and complete understanding of their financial position.
If you’re unsure where to start, try asking yourself these questions:
What are my income sources? (Employment income, business income, investment income or Government payments)
What are my recurring expenses? (Mortgage or rent payments, bills and utilities, subscriptions, recurring debts, and necessities, such as groceries and shopping)
What are my debts? (Personal loans, credit cards, buy now pay later accounts, etc.)
What are my savings? (What’s leftover after expenses and debts are paid to save or invest, and do you have a current savings account?)
The best way to fully understand your cash flow position is by putting a budget together. A good budget will provide the structure and discipline to healthy financial habits. It will help you see how much, if anything, you can save and where your money is going. What are the numbers telling you? Are your outgoings exceeding your inflows? Or do you have a savings capacity?
If you don’t already, it may help you to have a budgeting tool (like this one from the Australian government) or a spreadsheet. This allows you to keep track of your income, expenses, debts and savings to ensure that you are living within your means.
We suggest reviewing your monthly expenses and looking for ways to cut back on unnecessary spending. We know that life is expensive, so this can seem like a daunting task. Try starting with cancelling subscriptions or memberships that you no longer use or finding cheaper alternatives for your regular expenses.
Another way to manage your cash flow is by implementing strategies to increase income. This could be by starting a new business or side hustle, investing more, or reviewing your current investments to see where you could be making better returns.
Remember, understanding your cash flow is the first important step towards managing your cash flow more effectively. And effective management will help you free up more money to put towards your financial goals.
2. Ensure your goals are SMART
Now that you’ve established where you’re sitting currently with your financial position, it’s time to decide on your goals.
The SMART framework is a widely-used approach that helps you set personal and business goals, but it can also be extremely helpful when it comes to setting financial goals. The framework is comprised of five key elements that help to define well-constructed goals:
- S for specific goals: Goals should be specific and clearly defined, and should answer the questions of who, what, when, where, and why. Example: Rather than setting a goal to “improve my financial position” a specific goal would be “reduce my debt-to-income ratio by 10% within the next 12 months”.
- M for measurable goals: A measurable goal is one where you can track your progress and know when you have achieved it. Example: Your goal may be to increase your monthly income by $1000 within the next 6 months through work promotions or side hustles. This is measurable because you can track your increase in income over the 6-month timeline to determine how your progress is going.
- A for achievable goals: An achievable goal is one that is realistic and attainable. You will need to consider your income, expenses, and any other financial obligations you may have, as well as your resources, and available timeline to achieve the goal. Example: If your goal is to pay off a $10,000 debt in a year, but you know your income is limited, you may choose to set a more modest short-term goal of paying off $5,000 in a year, and reassess at the 6-month mark to see if you are in a position to increase your payments.
- R for relevant goals: Goals should be relevant to your overall objectives and priorities. This means that they should be aligned with your values and should contribute to your long-term success. For example, if your values are rooted in spending time with and supporting family, a relevant financial goal may be to increase your income and save for a deposit to buy a family home.
- T for time-bound goals: An achievable goal is a time-bound goal, meaning that you should set a deadline or timeframe. This helps to create focus, and ensures that you stay on track and make progress towards your goal. For example, you might set a goal to have a $50,000 house deposit saved within 2-years. Checking in and reassessing every 3-6 months to see how you’re saving is a good way to stay on track.
Understanding your goals and then managing your cash flow position around these goals are critical steps towards financial success. If you are struggling to establish goals, then this is a great place to start to discover what your financial priorities are, and identify areas where you may need to improve or make better financial decisions.
3. Draw up a financial plan
You wouldn’t start building a house without a plan. Nor would you set out on a long trip without a map. A financial plan is a roadmap that is a crucial step in helping us to achieve our financial goals.
Working with a financial advisor can help you create a financial plan that is tailored to your unique needs and goals, and factors in things like income, expenses, assets, liabilities, investments, retirement plans, and insurance coverage.
A detailed and comprehensive financial plan is drawn up by your advisor, and outlines your current financial situation, your short-term and long-term financial goals, and the steps you need to take to achieve them. An effective financial plan outlines actionable steps, sets timelines, tracks your progress, and considers your personal and professional goals, as well as your financial goals.
This plan should be reviewed regularly to ensure that you are on track and making progress towards your goals. The beauty of a financial plan is that it is not set in stone and can be adjusted as our circumstances change.
It’s important to note that a financial plan is not a one-time event, but rather an ongoing process. Your financial situation, goals, and priorities may change over time, and your plan needs to be flexible enough to accommodate these changes. That’s why it’s crucial to review and update your financial plan regularly, at least once a year or whenever your circumstances change significantly
So there you have it, our 3 top tips for achieving your financial goals in 2023!
Financial planning can seem overwhelming, but it doesn’t have to be. At BIS Cosgrove, we are here to help you achieve financial security, peace of mind and guide you through the complexities of financial planning. We provide you with expert advice and help you make informed decisions about your money.
It is never too late to take control of your finances and start making positive changes for your financial future. Take the first step towards your financial goals today and schedule a discovery meeting with one of our advisors. Together, we will develop a uniquely tailored financial plan that suits your individual circumstances and helps you achieve your your goals.
Don’t let financial uncertainty and confusion hold you back from living the life you want. Contact us now to start your journey towards financial success and security.
Looking to take control of your financial future? Our Financial Goal Setter is a powerful tool to help you establish clear and achievable financial goals, whether you’re looking to save for retirement, purchase the family home, pay off debt or build an emergency fund.
This tool helps you to identify and set your goal, review your current financial situation and track your progress over time.
