The Four Step Goal Process
Goals. When it comes to the end of the year, we start with all sorts of goal-based ideas for what we want to do. New Years Resolutions abound and usually they are based in some self-improvement desire. We want to improve our health, we want to improve our social life, we want to improve our organization to better our lives. Some important things that we often forget to organize, or tend to put off, are our financial goals. Having a step-by-step process can make it easier to get those financial goals lined up and give us a good sense of what needs to get done to realize those goals.
Step 1: What are your financial goals?
There are multiple different types of financial goals we can have. Vacation and travel goals, education goals, hobby goals, side-hustles and businesses, relocating, and one of the most important, retirement. If we don’t have a clear understanding of what our goals are, it makes it all the harder to plan for them.
Naming goals helps us to clarify them and therefore clarify what it will take to achieve them. “Going on Vacation” isn’t quite financially equivocal between a three-day weekend to visit your parents or a three-week trip to Italy to hike Cinque Terre.
Step 2: How much are you saving?
Budgets are tricky, even for financial advisors, mostly because we have differing methods of buying our goods. Costco-goers know that buying in bulk, especially when there are sales on goods you prefer, means that weekly, bi-monthly, or even monthly your budget will fluctuate and make you unsure what you can afford or not. That’s why we sometimes recommend utilizing varying methods of budgeting, depending on your spending habits. At the end of the day, it’s not how you budget, but rather that you budget.
Once you have your budgeting under control, you can examine at your finances and determine how much you need to save and how much you can put away to achieve your goals.
Step 3: Ensure your portfolio matches the combination of your risks and goals
Matching your goals to your portfolio is easily one of the parts of financial goals that are forgotten, but yet may be the most essential piece. Step 1, clarifying your goals, is important here because the time horizon of your goals helps determine how you prepare your portfolio. If your horizon is longer and more expensive, you can design your portfolio to be a more buy-and-hold type strategy whereas for short term and quick trips/purchase, you may want to consider an interest/dividend-based portfolio.
Step 4: Hire a Trusted Professional
If all these steps are confusing and difficult, then perhaps you should consider talking to a financial planner/advisor. Having a trusted advisor, whether for real estate or finance, can help you through the steps of your goals and prepare a better and more focused plan. Even if you do create your own plan, sometimes it’s good to have an advisor look over your plan and keep you on track, if, for no other reason, than for peace of mind.
Don’t forget to catch Xavier and Alex of Emergent Financial Services every Thursday at 10:15 am on Today y Mañana!
Until next time,
I’m Nickolas Urpí
