All of us only get one life. It is a shame, therefore, that many people drift along without a plan to realise the dreams they might have for the future.
The good news is, with some careful forward planning, many of these same people still have time to realise their life goals – whatever they may be.
Perhaps you dream about retiring and going on a round-the-world cruise. Or maybe you are looking forward to buying a dream home, with a wood workshop in the garden for your projects.
Whatever your life goals may be, a financial planner can help you understand all of the elements of your financial world and help you outline a plan to work towards your ambitions.
In this two-part guide, our financial planners here at Cedar House will be sharing some of the key steps in building a plan which helps secure your financial future and independence.
We hope you find this content helpful. As always, we would love to hear your thoughts and questions if you would like more information or advice.
When you embark on any long journey you need a clear objective: where are you going?
You also need a “road map” showing how you will get there, showing flights, transfer information and public transport. Costs, travel times and luggage all need to be factored in as well.
If this much thought and planning go into a long-haul flight, then think for a minute how much thought needs to go into your financial roadmap!
Thinking about where you want to go in life, and how you will get there, requires quite a substantial amount of financial knowledge, including:
- Investing and investment products
- Tax planning
- Estate planning and inheritance tax
And even more. Understanding all of this is a lot to ask of most people. It therefore really does help to sit down with an experienced financial planner to assist you in getting your head around these kinds of concepts, products and financial landscapes.
That said, there is much you can – and should – do yourself before booking your first meeting. In particular, you should take some time to ask yourself some honest questions:
- “Would I be able to keep my current lifestyle if I ceased working?”
- “Can I sleep at night, knowing my plans ensure I will have enough money in the future?”
- “Do I feel financially constrained at the moment, or empowered? Why?”
- “Do I completely understand my present financial circumstances?”
Answering the above will give you a lot more clarity when it comes to sitting down with your financial planner to start devising your roadmap.
Perhaps you have heard of these goals before. SMART stands for goals which are Specific, Measurable, Achievable, Relevant and Time-Bound:
- Specific: Make sure you are laser-focused with your goals. Do not be vague, making goals such as “I want to retire one day.” Talk about the where, what and when. For instance, “I want to retire by age 55 in my current home, with the mortgage fully paid.”
- Measurable: Ensure you can measure whether or not you are progressing towards your goal. In the previous example, you can measure whether you are on track to pay off the mortgage by looking at your remaining mortgage payments.
- Achievable: Of course, your goals should not be outlandish. You might well dream of retiring in a £5m mansion, but if your current and projected income and wealth will get you nowhere near being able to afford it, then you should revise your goal.
- Relevant: The goals in your financial roadmap should align with the overall life direction you want to take. For instance, if your life plan involves making your pension as tax-efficient as possible, then it makes little sense to have a goal stating you wish to build up pension savings which would take you over the Lifetime Allowance.
SMART goals are incredibly important when it comes to creating a plan for the life you want, as they give great clarity and accountability. Make sure you discuss them with your financial planner and write them down so they can be clearly referenced. Remember, goals which are not written down are just dreams.
This is often the area where many people struggle in their conversations with a financial planner. It might be, for instance, that you have unrealistic expectations about what kind of financial goals you can achieve. However, it is important to discuss this with your adviser, as it is better to hear the truth now and explore more realistic options, than be hit hard with it down the line when it is possibly too late.
On the other hand, it might be that your expectations are too low. At Cedar House, for instance, we have had many conversations with clients where they thought they would not be able to retire early, but actually, they could (with a bit of careful planning). Again, a financial planner will be able to point out areas in your financial circumstances and goals that you might have missed, opening up exciting doors of new possibilities!
When working through your expectations with your financial planner, it can help to explore some important key questions:
- What are your dreams, hopes, fears and vision for your future years?
- How does your current lifestyle align with your desired lifestyle?
- How much risk are you prepared to take with your money? (E.g. When investing).
From here, answering these questions can help your financial planner identify what kind of investment strategy might be appropriate for your particular risk tolerance. They will also be able to outline what kind of investment returns and timescales would be needed to achieve your goals and vision for the future.
Join us soon on Part II of this series, exploring How to Create the Life You Want. We hope you found this content useful food for thought. We would love to hear from you if you would like to discuss your own financial situation, goals or roadmap with one of our financial planners.