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8 Steps to Getting Ahead Financially


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1. Set some goals

Where do you see yourself in the future? What are you trying to achieve? The most important start to getting on track financially is to know where you want to get to.

You may want to:

  • Retire early
  • Travel lots
  • Be able to help your children more
  • Buy a business
  • Maintain your health
  • Have an emergency Fund
  • Repay your mortgage by XX years old

Many goals in life need money and a plan, but you need to start with the goal.

Goals can be:

  • Short Term (in the next 3 years)
  • Medium Term (4-9 years) and
  • Long Term (10+ years away)

Ideally, you will have at least one goal in each time period.

A great tip with goal setting is to remember to make them SMART:

  • S = Specific (what do you want to accomplish)
  • M = Measurable (how much / how many)
  • A = Achievable (is it realistic based on your circumstances)
  • R = Relevant (is it worthwhile, is now the right time, is it important to me)
  • T = Time bound (when)

“I want to be rich” isn’t a great goal. “I want to build a retirement fund of $500,000 so that I can have an income of $30,000 a year in retirement from the age of 65” is a better goal. It’s specific and you know exactly what you’re aiming for.


2. Write your goals down

Psychology professor Dr. Gail Matthews, at the Dominican University in California, led a study on goal setting with nearly 270 participants. The results? You are 42 percent more likely to achieve your goals if you write them down.

Writing your goals down not only forces you to get clear on what, exactly, it is that you want to accomplish, but doing so plays a part in motivating you to do what you need to, to make the goal happen. The process of putting your goals on paper will force you to make plans, to ask questions about your current progress, and to brainstorm your plan of attack.


3. Make a plan

A goal without a plan is just a wish.

There’s no point having some fantastic aspirational goals, if you don’t have a plan to get you there. Work out:

  • How much you need to save
  • How long you need to save for
  • Whether anything needs to change now to make the chances of you achieving your goals, higher

You may need to get some advice on this, or you can start with some of the tools at Sorted – Your independent money guide » Sorted, which has calculators which can work out all sorts of things.

Once you have your plan, put it into action.


4. Check your priorities and find your balance

You may have a goal that is incredibly important to you, but in order to achieve it would mean significant compromise for you now, perhaps financially, perhaps through seeing less of your kids or family.

Only you can work out whether those compromises are worth it. Assess what’s most important to you: the goal you thought you wanted or having a better balance now. You may need to review your goals and make them more realistic so that you’re not giving up too much in the meantime.

Saving for the future is important, but not at all costs.


5. Get the basics right

You’ve got your goals, you’ve made a plan, but if you’re not on top of your own finances and budget, then it may not work out however hard you try.

No one likes to budget, not even me! Spreadsheets are boring and constraining. That’s why I really like the approach of The Barefoot Investor, a book by Aussie adviser Scott Pape. I wrote a summary of his approach to budgeting here. It uses different bank accounts to budget for you, and can help you get ahead financially quickly, and without sitting in front of spreadsheets for hours on end.


6. Review your goals and plans

Things change, life gets in the way, and the unexpected happens. That’s why it’s important to review your goals and plans regularly. I’d probably recommend every 6-12 months for a review. Check in to see how your doing, whether the goals are still important to you or whether they have changed a bit, and then re-plan if you need to.

When I write a recommendation and a plan for clients, I can pretty much guarantee that none of it will be right in the future, because the plan is a plan based on what we know today, which is all it can be. 6 months from now, so much can change, which means that the plan needs to be adjusted to accommodate the changes.

It’s still important to have a plan, as you must know where you’re headed, but it’s also important to update it to keep you on track for your evolving goals.


7. Every financial decision should be intentional and related to a goal

So often, I come across clients who have a bit of money in shares, a bit of money in crypto, a house, maybe an investment property, some money in the bank, some in KiwiSaver. They’ve just done a bit of everything with no intention and no purpose.

If you have an investment property, why do you have it? What are you trying to achieve from it? If you’ve got it because you thought it might make some money and someone else told you it was a good thing to do, that’s not good enough. If you’ve got it because you’re planning to sell in XXX years and make $YYY profit so that you can do ZZZ, that’s brilliant.

If you’re putting money into Sharesies, why? Are you building an emergency fund, is it going to form part of your retirement fund, is it a holiday fund? Each of these would lead to a completely different investment strategy (or should at least), and so you need to know the WHY of what you’re doing.

If you put your money somewhere or make an investment, try to work out the “why”. If there isn’t one, or you don’t know, then either work it out, or go back to your goals and put the money in something that is going to help get you there.


8. If in doubt, get advice!

I had to end with this really!

Sometimes, it’s all just a bit hard, and you need some input from someone else to make sure you’re headed in the right direction. That advice could be from your bank, a mortgage broker, an insurance adviser, an investment adviser, a business adviser, or an accountant. If you have an adviser, it can also be helpful to have someone hold you accountable for sticking with your plan, and not getting off track.