1. Prioritise Goals
It is most unlikely that you will be able to achieve all your dreams at once and to attempt to do so usually ends in failure all around. Take a little time to order your goals in their relative importance to you. If you have a spouse or partner, this should be a joint enterprise to have the best chance of success. The chances of achieving what matters most are greatly enhanced by focusing your efforts.
2. Primary Goal
To realise your primary goals, desirable but less important ones will often need to be postponed to achieve the best allocation of resources and time.
3. Conflicts
Conflicts arise even if all the goals are worthy which raises questions such as which goal will be of the best short-term benefit balanced against which goal if delayed will cause the most long-term harm.
4. Timing
Make time your most important ally in achieving goals: money deposited in interest-bearing savings or invested in stocks and bonds to yield compound growth. The more time available, the greater the chances of success. Of course age is a major factor, younger people will pursue different strategies to those that are older. They have more time to build a nest egg and to recover from any setbacks hence they can take greater risks. An older person who does not have the luxury of much recovery time must follow a more cautious approach to investments.
5. Objectives
In setting out your list of goals, look for things that improve your chances of being financially secure, happy, fulfilled and ready to meet any additional aspirations. Items that are likely to be on the list include getting out of short-term debt, building an emergency fund, children’s education, suitable life insurance. Provision while the children are still in education or elderly grandparents are still alive, also for your spouse, clearing the mortgage on the family home. The list needs to be ranked in order of importance once assembled.
6. Family considerations
Included family members, your spouse or significant other should be part of the process from the beginning. Children should also be able to have some say regarding goals that will affect them.
7. Do not delay
The longer the delay in identifying your goals and introducing measures that focus on achieving them reduces the chance of success due to less desirable patterns of conduct becoming entrenched and the lost opportunities of compounding your money.
8. Focus on the large items
Once you have defined your goal priorities, try to keep your spending patterns as near to plan as possible (unless an exceptional opportunity arises). When you are considering making a large outlay for anything consider: “is this moving me nearer my primary goals or leading me astray?” If a big expense, say, an extended holiday will divert money from say reducing your mortgage by a lump sum payment, just delay the holiday or think of a less expensive venue.
9. Don’t neglect the small items
Most of life being lived in the here-and-now the most of what you spend will continue for daily expenses, which includes entertainment and enjoyment, which is as it should be.
However, the large expenditures should never be allowed to be out to focus, and a careful avoidance of the more frivolous small expenses usually makes a significant difference to the end of month figures.
10. Accept the necessity of change
Your family is growing as you grow older so your needs and priorities will be different to that of the past. It is prudent to have an in-depth re-examination of your priorities say every five years. Be prepared for change.