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6 Tips For Setting Financial Goals That Stick 6 Tips For Setting Financial Goals That Stick
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6 Tips for Setting Financial Goals That Stick

Insights & Ideas Team •  January 5, 2015 | Your Finances

For many, the new year signifies a fresh start, a time to think about personal and financial goals and the “new” commitments you plan to make. Yet, for all the initial enthusiasm, keeping yourself motivated, committed and moving toward the accomplishment of those goals is often tough.

If you’re tired of setting goals and making resolutions that quickly fade, consider these tips to help you stay focused on the future:

1. Learn from the past. Think about the goals you set in the past. Before you put these “to bed,” reflect on what worked and what didn’t—and why.

2. Set clear goals. Most people tend to set financial goals that are more about money than about things that motivate them emotionally. Yet goals that are tied to what you truly value are often easier to achieve than goals that are simply tied to money. For example, setting aside 10 percent of your monthly pay isn’t nearly as powerful a motivator as setting a goal to save $10,000 so that you can take your family on a vacation next December. Part of what gives this goal its power is that it’s SMART—in other words, it is Specific, Measurable, Attainable, Relevant and has a Timeline.

As you define your goals for 2015, prioritize what is important and what you can realistically achieve. Be sure to set a time frame for reaching your goals, and figure out whom you might need to help you get there. Then review your goals periodically to make sure you stay on track.

3. Create a financial to-do list. The new year may be an ideal time for recommitting yourself to getting financially fit. A financial to-do list can provide important action steps that can help you get your finances in order and keep them that way. Some of these include:

  • Giving your portfolio a regular checkup to make sure your mix of investments accurately reflects your goals, time frame and risk tolerance.
  • Taking full advantage of your employer’s retirement plan (if you’re not doing this already).
  • Tracking your spending to see where your money is going.
  • Calculating your net worth so that you understand where you stand financially.
  • Checking your credit profile to ensure it accurately represents your creditworthiness and to protect yourself from identity theft.
  • Creating a legacy for future generations and/or charitable organizations that reflect your values.

4. Create a financial not-to-do list. As crucial as a financial to-do list is to your long-term financial security, creating a not-to-do list is equally important. That’s because a not-to-do list can help you avoid some of the mistakes that may be keeping you from making the most of your money. For example, do not:

  • Try to time the market. No one knows for certain which way the market will head next. Instead, be strategic and thoughtful about your investment decisions.
  • Make investing decisions in isolation. Rather, consider how each may impact your overall financial goals.
  • Delay saving for retirement. The sooner you get started, the greater the impact time and compounding may have on your ability to build financial security for the future.
  • Tap your retirement savings unless in an emergency. Taking money from your account is like borrowing from your future to pay for your present needs.
  • Ignore the important role risk plays in your portfolio’s ability to grow over time.
  • Minimize the impact of inflation on your money’s future buying power.
  • Set it and forget it. Review your investments periodically to make sure they’re performing as expected. If they’re not, be ready to make changes as needed.

5. Assess your current situation. Over time, your personal and financial situation is likely to change. Consider how this may impact your goals, risk tolerance and time frame, as well as your investment and insurance planning.

6. Update your estate planning documents. Make sure you have a properly drafted and signed advance health care directive, and durable financial and health care power of attorney so that someone you trust can make health and/or financial decisions in the event you become incapacitated. Check to see that your will (and any trust) accurately reflects your wishes and that the beneficiaries on your retirement accounts and life insurance policies are up to date. Consider working with an estate attorney to review and update any documents necessary to ensure your goals are met with minimal delay and expense.

With 2014 behind us, don’t feel pressured to make resolutions because you feel you should. Instead, open yourself to the possibility that setting concrete financial goals can be the start of some truly positive changes in your life. For help, contact your financial representative.

Remember, the clearer your goals are, the more confident and motivated you’ll be to take the right financial steps in 2015 and beyond. Best to you in the New Year, and happy goal setting!

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