How to set realistic financial goals

For some of us, setting financial goals may seem like an overwhelming chore that quickly ends up in the “too hard” basket.

We know that it will be of benefit but the fear of failure, procrastination, and a perception that it will be a tedious process can quickly sap our enthusiasm. The key to overcoming this problem is to break things into a few simple steps that will quickly get you off the ground, start building momentum, and set you on a steady path toward financial freedom.

Create a vision

The best way to start setting realistic financial goals is to determine what will motivate you. What are your dreams for your ideal lifestyle? What will you own? Where do you want to live? What car will you drive? What will you enjoy doing?

Whether your answers to these questions are humble or huge, the important thing is to make them as specific as possible so you can visualise yourself enjoying them, rather than getting caught in the trap of just making vague wishes such as “having more money to do what I want”. Your specific goals and visions will ultimately be the fuel that will propel you to put systems and plans in place.

Build positivity with quick wins

While the first step is to think long-term about your big dreams, it is important to build some positivity quickly by getting some smaller goals under your belt. This might be aiming to go hard on paying off your credit card balances, or to start regularly depositing a modest amount in a savings account that is earmarked purely for future investment purposes.

By earning some quick wins, you can gain a sense of achievement and see tangible progress that will spur you on toward more substantial goals.

Reality check your spending

Many people fail to get their financial goals off the ground because they think they can rely on willpower alone to change spending habits, rather than using hard evidence about what they spend on and where changes can be made. Just one hour with a calculator and your bank statements for the last 12 months will allow you to get a handle on exactly where your money is going now.

You may be surprised to find a much higher proportion of your income going toward discretionary spending than you first thought, such as eating out or impulsive purchases. This exercise allows you to quickly determine which areas can be cut back on, so that you can identify funds that can be redirected toward financial growth objectives.

Save before you spend

Another quick and effective budgeting technique that can generate momentum is to follow the simple rule of “paying yourself first”. This simply means that the first thing you take out of your regular pay check is a set amount to put toward saving and investment plans before you start spending on anything else. By prioritising this one simple action, you are taking a significant step and forming an invaluable habit that will start growing your wealth, without any tedious record keeping.

Of course, more detailed budgeting should be the ideal you are aiming for, but if you wince at the thought of crunching numbers, this step will at least get you started, and deliver a sense of progress and control.

Set staged and realistic goals

Once you have taken the above small steps, you can start to make more adventurous plans for the medium to long-term. This can involve bigger-ticket financial objectives that will make a real difference to your wealth creation, such as paying down your mortgage faster, setting targets on your superannuation nest egg, or building a diverse investment portfolio.

Ask the experts

One phone call could be the start of some profound and exciting changes in your goal-setting journey. Engaging the help of a financial planner can open up a whole range of opportunities and resources that can benefit your financial growth. This includes a structured approach to examining your lifestyle priorities and investment preferences, so you can map out a more comprehensive plan targeting a variety of goals and take the worry out of making investment decisions. You can lean on their expertise, research capabilities and monitoring systems to create a durable ongoing plan that will help you reach your goals more effectively.

We have an established alliance with Bridges, to provide our customers with financial advice. Bridges has been helping Australians with financial advice for 30 years. A Bridges financial planner will develop a plan specifically for you: one that’s tailored to your needs and circumstances to help you achieve your goals.