Thursday 8 March is International Women’s Day – a time to celebrate what has been a remarkable year for women around the world. From the #metoo and #timesup campaigns to demands for equal pay, women are taking unprecedented strides in both the professional and public spheres.
As with most life goals, a financial objective is hard to meet without a plan. On the other hand, discussing the process with a professional, putting pen to paper and envisioning the steps to long-term success brings that goal into focus and makes it a reality.
Plans written down on paper give your dreams a direction, whether they are for short-term saving or long-term wealth. They help you to figure out where things are going wrong or could go wrong, and they keep you motivated by proving it’s possible and easing the fear of failure.
The process of making a financial plan identifies steps that must be taken and turns a hoped-for result into a viable goal.
Importantly, in a turbulent economic period such as the one we have experienced in the last year, a written plan allows you to keep your eyes on the long-term prize, rather than making a panicked decision. It also gives you the chance to make far more accurate fine-tuning decisions, with help from your financial adviser, to ensure everything stays on track towards the agreed goal.
The long-term nature of a financial plan can help ease any short-term concerns as it allows time for the market to smooth out the bumps and dips along the way, while providing the opportunity for growth. It also gives the investor time to make the most of compound interest.
The first and most obvious step is to determine your priorities. When it comes to retirement this means figuring out what type of lifestyle you’re hoping for. Are you looking to travel the world regularly and stay in five-star hotels or is a shack down the coast, and a few afternoons of fishing a week, your idea of retirement heaven? Armed with this information, your adviser will be able to crunch the numbers to work out what your final dollar amount needs to be.
A qualified financial adviser will show you numerous ways to make your long-term hopes a reality, including the utilisation of tax effective financial vehicles, proper budgeting, protection of your financial future through insurance and constant fine-tuning as regulations change and new opportunities present themselves.
A thorough plan will have milestones along the way that serve to break up the major plan into a number of smaller ones and also act as checkpoints to ensure you’re still on track. Such a strategy is known in some circles as a SMART plan. ‘SMART’ is a well-known and heavily researched guide to setting powerful but realistic objectives.
A SMART plan sticks to these principles:
S – Specific & simple
M – Measurable & meaningful
A – Actionable & attainable
R – Realistic & relevant
T – Timely & timetabled
Perhaps a final ‘R’ should be added to the plan to represent ‘Review’ and ‘Reassess’. As previously mentioned, once the plan is in place it must not be considered unchangeable. In fact, it should be fine-tuned at least once every 12 months during a visit to your adviser. Products develop, governments introduce new legislation, regulations are altered, changes to tax laws offer new opportunities and markets rise and fall. Whether in the name of change or simply to make you confident about your financial future, it pays to review your plan regularly.
After all, if you’re confident about your future, you’re more likely to enjoy the present!