New Year Financial Planning Tips 2016 part 2

13 Jan 2016 | Articles |

Tip No. 2 – Review your goals, this may not be what you think!

The beginning of a New Year is always a great time to have a look at new ideas.

It’s not so much about resolutions as having a fresh start, there is a natural affinity with early January and using this as a time to make some changes. Here is the second in our series of articles about how to use the New Year as a springboard to making some key changes in your financial planning.

In our new Book “The Wealth Secret” (being released soon) we outline the importance of working your finances around a ‘map’.

The crucial element in making this work for you is for the map to have clear and concise goals or objectives.

The concept is not as simple as it sounds. Nor, at the general level, is it revolutionary. Many of you will already have goals and targets, ones that may already be the focal point for your financial planning.

However, what may not be obvious or may be different to how you have viewed things in the past are two elements of this that we specialise in.

The first is the interrogation, examination, testing and challenging of the targets, the goals and the objectives.

The second is the methodology of how we help our clients plan towards these objectives (after being suitably examined etc.)

We believe that a common error is to set goals too lightly. To explain further, let us provide an example. Many people will have a goal ‘early retirement’. As an aspiration this is fantastic. But it is not a goal (in financial planning terms). A goal would be to be in a position to be able to retire at age 62. The goal needs to be specific.

To further complicate matters in most cases, individuals may have multiple goals or objectives, “to retire early”, “to buy a second home”, “to help our children onto the property ladder”, “to ensure we can afford care fees in our old age, if required” and so on…..

So the goal of retiring early is laudable. And could be easily achievable, if you are happy to retire on a basic minimum income throughout your (hopefully long) retirement years. But is this what you mean? Probably not, because you probably want a certain lifestyle and you may well have other goals (which could be complementary or separate), which also need to be factored in.

The examination of the goals you have is something we will spend a great deal of time over, with you, and we will give substantial attention to these goals, trying to help you weigh them up, give precision to them and see how they interact with one another.

The goal setting is something which requires time and it is our experience many people have financial ‘plans’ constructed against objectives which have not been properly thought or worked through.

Once the goals are set, this leads on to our second speciality, which is to help you construct the right financial plan or ‘map’.

Again this is not as simple as it seems. The historic method many people took to mapping out their future finances was simply to save and invest, seeking to save the most they could and get the best return on their saved money.

As with the goal setting, this simple strategy is laudable. But, often, it does not work and in this more complex world (longer retirement periods, constantly shifting economic and financial backdrop etc.) there is a better way of putting together a robust approach.

This is to use cash flow financial planning. This is a method of providing a precise map which connects your existing position to your objectives and illustrates the exact steps required to get from here to there. This includes scenario testing, which is basically a way of saying “what if” in a number of contexts.

What if you don’t get the targeted returns you are aiming for? What if you suffer ill health? What if you retire at 62 instead of 65? The scenarios can be run through the cash flow forecasts to see what the effect different pathways have in terms of meeting your objectives.

These scenarios will often throw up interesting outcomes and will provide invaluable information to support (or challenge) the decisions you are making as to how to plan to meet your goals.

It is this comprehensive approach, combining a rigorous testing of your goals with a precision in the financial planning steps, which makes for the effective outcome, which is a very different method to that used by the majority of people.

Successful wealth creators tend to have the same trait. They are diligent, they work to carefully prepared plans, which are well set out, managed and monitored.

Our second tip for the New Year is:


If you do not have specific goals which have been carefully assessed or you do not have a clearly (written down) financial plan, or ‘map’, which sets out how these will be met, then you are likely to be relying on luck to succeed. We are here to help you work on both these aspects to get the outcome your desire. All you need to do is get in touch!

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