Setting Financial Goals: Tips for the New Year
‘Tis the season for New Years resolutions, but we’ll spare you the spiels about drinking more water or organizing the junk drawers. Instead, we’re going to talk about setting big-picture goals and planning for the future.
To get where you want to go, you need to know your destination in the first place. That’s why defining your financial goals is so critical. When we work on Goal Plans with clients, we try to categorize goals into “needs, wants, and wishes,” and it’s a good way to start thinking about your priorities for the future.
Needs are pretty self-evident: things like living expenses, medical care, and other critical costs. These you either cannot go without, or would cause hardship to go without. Large, one-time expenses like home repairs can also fall into this category.
Wants are more flexible. These are goals that are very important to you, but aren’t strictly necessary in the sense you can, by definition, live without them. Travel is a common example, as is leaving an inheritance.
And Wishes are a little more aspirational. These are objectives you would like to attain, but you would still be okay – emotionally and financially – if they didn’t pan out. Now, this does not mean wishes are not important! As we alluded, knowing where you want to go is a big part of getting there. Wishes can help refine your other objectives and give you something to shoot for after meeting your more critical objectives, so don’t discount their value just because they are a lower priority.
If this sounds overwhelming, it may be helpful to jot down a list. Brain dump! Get it all out on paper and have fun with it. Then, you can rank each item on a scale of 1-10 to give yourself a little more clarity.
- Needs: 8-10
- Wants: 4-7
- Wishes: 1-3
Once you’re through, you should have a better picture of where you want to be. If you have a spouse or partner, include them. You might do this process together, or separately and compare notes afterward. It’s okay if you aren’t in total agreement on every detail, but at the end of the day, it’s a team effort and knowing where the other stands is crucial.
What we’ve described is just one part of our Goal Planning and Monitoring process, a collaborative, step-by-step planning service we offer to help clients achieve what matters most. Together, we help identify and go over your Needs, Wants, and Wishes, integrating your real-time financial data to create a flexible, living plan.
We perform stress-tests, risk assessments, and simulations to help illustrate scenarios, visualize how certain decisions may affect the future, and see your probability of success. Once a plan is adopted, we automatically track key variables on a quarterly basis to keep you on the right track.
If you’re interested in a tailored Goal Plan, get in touch! Whether you are an existing client or a reader passing by, our goal is to help you reach your goals, and we believe the road to success starts with a plan.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Tomblin Diego Porter Investment Group of Raymond James and not necessarily those of Raymond James.