How to create financial goals you will actually stick to

The idea of creating goals for yourself isn’t a revolutionary one. It is very likely that many of you would already have been told of its importance, thought about it or even done it yourself. However, you may find that this still leads to inaction and unaccomplished goals.

A financial goal is a personal monetary objective you set for yourself, in order to achieve outcomes you desire in the short and long term. They can include diverse set of personal finance goals, such as building an emergency fund, saving for a holiday, wedding or a pair of sneakers, paying off debt or spending less on your daily coffee habits and online shopping, investing for your child’s education fund or your retirement, starting a side hustle to earn more money, and more.

To help you set smart financial goals that you will end up achieving, you can consider making use of these 5 golden habits for goal-setting.

When setting financial goals for yourself, you need to think about what you ultimately want to achieve. It should be something you see as valuable, and more importantly, be something that you resonate with on a personal level.

Goals like I want to own a car or I want to be able to retire comfortably can ring hollow, unless they are attached to deeper meaning.

Knowing why you want to buy a car gives your goal greater meaning, such as, driving your immobile parents around or to the hospital, saving time by sending your children to school or doing a better job at work.

Why do you want to retire comfortably? A good reason would be so that you can provide your spouse with a similar standard of living or alleviate financial burden on your children to provide for you.

What you want to achieve is your end goal. However, having a clear understanding about why you want to achieve it will give you the impetus to actually achieving your goal.

You’ve probably heard of this one before – “A journey of a thousand miles starts with a single step.”

Large, grand goals can often feel unattainable. Rather than procrastinate or suffer from analysis paralysis trying to plan for the unachievable, try breaking down your end-goal into smaller mini-goals that are clearer and more realistic.

This exercise can also help you figure out exactly what steps need to be taken to ultimately achieve your end-goal. This can be much more effective and easier to understand than listing down a grand, but unclear or abstract, goal.

These smaller steps should now feel more actionable, encouraging you as you achieve each small-win and giving you the confidence to embark on your journey to fulfil your eventual quest.

Now that you know what needs to be done for you to attain your end-goal, your focus should shift towards a timeline for achieving the actionable goals you’ve set for yourself.

Having a concrete yet realistic deadline to achieve these bite-sized goals is crucial because it equips you with a sense of urgency, without crippling you with something unfeasible.

Defining a when for each of your goals also helps you to realise how long it may take for you to achieve your end-goal, and allows you to evaluate if you are willing to commit the time and effort required to achieve it.

This may feel contradictory, but your “smaller and clearer” goals also need to be important and challenging enough to allow you a sense of accomplishment when you achieve it. Put another way, if your goal doesn’t push you, it really should not be listed as a goal because it will feel like merely a task.

Striving to achieve a difficult enough goal will naturally mean you might encounter some setbacks. This shouldn’t discourage you, but should instead give you greater motivation and experience to see it through and ultimately, move closer to your end-goal.

In fact, if you don’t fail at certain hurdles, you are probably not challenging yourself enough. The point of carving out bite-sized goals is so you can balance this out by celebrating success more often than suffering failure.

Financial planning or retirement planning for retirement is a goal you cannot afford to neglect. Whether you like it or not, you will face the reality that you are less relevant in the workforce or that you are not healthy enough to work one day.

When that day comes, you want to be prepared to pay for your daily living expenses and continue living a similar lifestyle. This means you need a nest egg that you can rely on.

Start building your retirement nest egg though smaller and more achievable steps – via a dollar-cost averaging, or DCA, strategy. In this strategy, you contribute a small sum of money each month, regardless of how well or badly the economy is faring. This allows you to ride out short-term market ups and downs and enables your investments to compound over a long time horizon.

The combination of this is that you will grow your retirement nest egg into a substantial amount, without making emotional decisions while the economy suffers or flourishes in the short-term, and stay focused on your long-term goals. At the same time, you also retain the flexibility to review your retirement goals regularly, and if you feel you need to be putting more away, you can simply do so.

One way to embark on a DCA strategy is to invest in the stock market. You can choose to put your money into country indexes, that track blue-chip companies which are typically the largest and most liquid companies listed in the country. You can do this on your own, via exchange traded funds (ETFs) listed on the individual stock markets, or if you are less confident at the beginning, through unit trusts or robo-advisory platforms.

Another thing you can do is invest through a savings plan, such as AIA Smart Wealth Builder. Similar to investing on your own, you are able to ride out short-term market fluctuations. It also lets you compound your money confidently without having to choose specific investments on your own.

AIA Smart Wealth Builder also provides you a safety net to cover important goals, including supporting your child through a good education, building towards a fruitful retirement or leaving a legacy for your beneficiaries, as well as letting you sleep more soundly with assurance against death, total and permanent disability and terminal illness.

To find out more about AIA Smart Wealth Builder, contact your financial services consultant or speak to us today.