When it comes to planning for your future, you need to consider your finances. Trust us—without having a solid financial plan, you won’t be able to achieve the future life you envisioned for yourself.
Now that you’re interested in financial security, you’ll understand that having a plan is key to reaching this goal. However, it’s not as straightforward as you think, and of course, there is a mountain of things to consider like any strategy.
Because of this, those who are looking to make significant changes in their finances work with financial planners to help them create a plan that fits their financial capabilities and health.
Whatever your goal may be, having a financial goal is crucial. But if you’re unsure of where to start, our experts have created a guide that will help you work alone or with your financial planner to create the best strategy for you. Let’s take a look!
Assessing Your Financial Health
Before you set your sights on your financial goals, you need to determine your financial footing. This requires a thorough review of your financial health. Assessing your financial health allows you to evaluate your income and expenses, debt, savings and investments, credit score, and set realistic goals for the upcoming year.
To conduct a comprehensive review of your financial status from the previous year, consider the following steps:
- Assess Income and Expenses: Review all sources of income and categorise expenses to understand where the money is being spent.
- Evaluate Debt: Take stock of all outstanding debts, including credit cards, loans, and mortgages. Prioritise paying off high-interest debt to improve financial health.
- Review Savings and Investments: Evaluate the performance of savings accounts, investments, and retirement funds. Consider increasing contributions to savings and investment accounts.
- Check Credit Score: Obtain a credit report to ensure its accuracy and identify areas for improvement.
By following these steps, you can gain a clear understanding of your financial health and set achievable goals for the upcoming year.
Defining Your Financial Objectives
Once you’ve assessed your financial health, you can start defining your financial goals. Defining financial goals is the process of setting specific, measurable, and often time-bound objectives that guide individuals to achieve different things with money.
A short-term financial objective is a financial goal that you want to achieve within a relatively short period, typically within one to three years. These objectives can be singular goals or incremental steps to larger financial goals. Some common short-term financial goals include setting a budget, starting an emergency fund, paying off debt, and saving for personal goods or experiences.
To identify and set short-term financial objectives for the new year, you can follow these steps:
- Define Your Goals: Determine what you want to achieve in the short term, such as paying off credit card debt, building an emergency fund, saving for a vacation, or making a major purchase.
- Set Specific and Measurable Objectives: Establish clear and achievable financial goals, such as saving a specific amount of money each month or paying off a certain amount of debt by the end of the year.
- Create a Budget: Develop a budget that aligns with your short-term objectives, ensuring that your income covers your expenses and allows you to make progress toward your goals.
- Track Your Progress: Regularly monitor your finances to see how you are progressing toward your short-term objectives. Adjust your budget and spending as needed to stay on track.
By following a structured process and staying focused on your goals, you can make significant progress in improving your financial situation in the new year.
Long-term financial goals are targets that you set to improve your finances over time, cover future expenses, or replace an income stream. Long-term financial goals typically take five years or longer to achieve. These may include saving for a down payment on a house, funding retirement, or paying off large debts such as student loans or mortgages.
Long-term financial planning involves creating a financial plan to achieve these goals. To define and achieve long-term financial goals, individuals can consider the following strategies:
- Identify Specific Goals: Clearly define the long-term financial objectives, such as early mortgage payoff, debt management, retirement savings, college funding, charitable giving, and insurance protection.
- Set Measurable Targets: Establish measurable targets for each goal, such as the amount to be saved for retirement or the timeline for paying off a mortgage.
- Create a Written Plan: Develop a written financial plan that includes specific objectives, measurable progress, a time frame for achievement, and the necessary steps to reach each goal.
- Prioritise Goals: Determine the priority of each financial goal based on individual circumstances, income, and other financial commitments.
- Incorporate Goals into Budget: Integrate financial goals into a budget to ensure that resources are allocated to achieve them. This may involve cutting unnecessary expenses and building money goals into the budget.
- Regularly Review and Adjust: Periodically review the progress towards long-term financial goals and make adjustments as needed to stay on track.
By following these strategies, you can effectively define and work towards achieving your long-term financial goals, leading to greater financial security and stability.
Learn the 50/30/20 Budget Plan
While it’s much better to work with a financial planner to help you create the perfect budget strategy, an excellent way to start is by using the 50/30/20 budget plan.
For those of you who may be unfamiliar, the 50/30/20 budget plan is a budget where you dole out 50% of your income for necessities, 30% for wants, and 20% for savings. While this may seem like a daunting task, it’s essential to have a budget plan to ensure you’re putting enough money towards your savings goals.
Though it may seem a bit intimidating at first, you’ll find that, over time, you’ll see a massive difference in how much you get to save, allowing you to reach your goals faster.
Keep a Money Tracker With You
Having a money tracker is one of the best ways to see how much you spend and save in a month. Tracking your spending will give you a better look into your money habits and provide insight to your financial planner on what needs to be changed and adjusted.
Knowing how you spend and save your money allows you to see where you stand with your financial goals. This way, you’ll be able to make adjustments to your budget and spending habits to ensure you’re staying on track in reaching your goals.
Exploring New Investment Avenues
In 2024, several emerging trends and potential investment opportunities are shaping the Australian and global investment landscape. Some of these trends include:
- Quality large-cap companies: Investors are focusing on quality large-cap companies with strong balance sheets and ESG (Environmental, Social, and Governance) factors, including renewable energy and technology sectors.
- Small-cap and high-quality bonds: Small-cap companies and high-quality bonds are also gaining investor attention, as they offer potential for growth and stability.
- Technology and AI: Technology, particularly AI, is expected to attract investor attention in 2024, with sectors such as renewable energy, wind, solar, and biofuels gaining investment traction.
- M&A in investment and wealth management: The Australian market offers fertile ground for mergers & acquisitions opportunities in the investment and wealth management sector, driven by disruptive technologies, evolving talent models, and environmental considerations.
- Real estate: The real estate market is experiencing a shift, with a focus on decarbonisation, energy efficiency, indoor environmental quality, and climate resilience.
- IT spending: IT spending in Australia is projected to grow 7.8% in 2024, with significant investments expected in cloud platforms, data and analytics, and cybersecurity.
- Private equity: The small and middle market buyout space continues to see steady deal flow, with attractive entry and exit opportunities for active co-investments.
These trends suggest that investors should be cautious and consider diversifying their portfolios to capitalise on emerging opportunities in various sectors and industries.
Emergency Fund and Insurance Planning
An emergency fund is a cash reserve specifically set aside for unplanned expenses or financial shocks, such as job loss, medical bills, car repairs, or home repairs.
If you don’t have insurance, an emergency fund can provide financial security and help you avoid relying on credit cards or loans, which can lead to debt. Ideally, you should aim to save enough emergency cash to cover at least six months of living expenses. This can be held in a liquid checking or savings account with a high-interest rate and easy access.
If you have insurance, it is important to reassess and update your insurance coverage whenever there is a major change in your life, such as getting married, having children, buying a home, or experiencing a significant change in income.
Conducting an annual insurance checkup is also a smart idea to ensure that your coverage aligns with your current needs and budget. When reviewing your insurance coverage, you should consider the type of coverage you have, the coverage amount, and any exclusions or limitations. Updating your policy sooner rather than later probably gives you an advantage, as life insurance rates tend to rise with age.
By reassessing and updating your insurance coverage, you can ensure that you have adequate protection and avoid any unpleasant surprises in the event of an unexpected event.
Putting Your Plan into Action: Creating a Timeline
A timeline is essential in a financial plan as it helps you streamline planning and execution, allocate resources effectively, monitor progress, mitigate risks, adapt to changing circumstances, and maintain clarity and confidence in your financial goals.
- Prioritise and Organise Your Goals by Time Frame: Categorise your goals into short-term, mid-term, and long-term. For example, short-term goals may range from immediate to three years, mid-term goals from three to seven years, and long-term goals beyond seven years.
- Create a Budget as a Roadmap: Once you have your goals, create a budget to track your income and expenses. Your budget will serve as a roadmap for your financial future.
- Make Your Timeline Flexible and Durable: Anticipate changes and challenges by making your financial timeline flexible. Adjust your strategies while keeping your goals constant.
Regular Financial Check-Ins
Regular check-ins are crucial for tracking progress and making necessary adjustments in a financial plan. They provide an opportunity to evaluate the progress of financial plans, identify potential issues, and make informed decisions to stay on track.
Your financial plan is not a static document, and regular check-ins help in tracking where the money goes, assessing financial goals and progress, and making any adjustments necessary to stay on track or correct course.
These check-ins also enable you to reevaluate your financial plan after major life milestones and ensure that the plan aligns with your current financial situation and goals.
Be Serious About Your Financial Goals
While many people find it easier to spend first, pay their bills, and save after, this may be difficult for those just starting their financial journey to security. With that being said, make sure to get serious about saving.
If you want to save money, you need to prioritise your life and work within your budget. While it may seem like a daunting task at first, it can be done. Consider putting money aside once you receive income and transfer this to an account you know you won’t be touching anytime soon.
When you build your savings funds, you’ll find that you’ll also develop a discipline that will allow you to budget and save, which gives you more room to stretch your financial capabilities.
The Bottom Line: Work with a Financial Planner to Create a Financial Plan to Help You Reach Your Goals
Creating a financial plan is essential to ensure you’re on the right track to financial security. However, if you don’t know where to start, working with a financial planner is the perfect way to ensure you cover all bases. Trust us—while it can be challenging to create a strict financial journey, your future self will be forever grateful for your hard work!
How Can We Help You?
If you’re looking to start your financial journey, it’s better to work with a financial planner than to try to do it yourself. Central Coast Financial Planning Group is a team of financial experts who assist clients in managing their investments and guide them in creating sound financial decisions. From superannuation advice to retirement planning, down to aged care and estate planning—we’ve got you covered.
If you’re looking for a financial planner in Central Coast, call us or book online to to schedule your initial appointment with our team and discover tailored solutions that will set you on the path to financial success.
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.