In my previous posting, I promised that I would continue this series of blogs on Financial Planning for the Novice.
With this in mind, and based on the numerous comments I received, I would like to talk to you about planning for your financial future.
When making a financial plan you need to know that although it has the big word FINANCIAL it also covers other areas of your life which is non-financial in nature but they do affect you financially one way or the other.
Financial Planning is like planning a trip. If you are planning a trip you would know:
1. Your destination.
2. How you plan to get there
3. The cost of the trip.
4. When you want to go.
5. The purpose of the trip.
6. What do you plan to do when you get there?
How can we take this from going on a trip to taking the trip of your financial life?
We begin by taking some time to diligently follow the SMART goal concept.
- SPECIFIC: what it is you want? In as much detail as possible, be very clear.
- MEASURABLE: what are you doing to acquire this goal? E.g. you write, “I am saving in a RRSP and also non- RRSP account”.
- ATTAINABLE: how am I doing towards attaining this goal? In this area you write and check on your progress. E.g. is my savings on track? Has my bank pre-qualify me for a mortgage?
- REALISTIC: your goal is probably realistic if you truly believe that it can be accomplished. e.g. What conditions would have to exist to accomplish this goal?
- TIMELY; when do you want to accomplish this goal? In this area you write down the date to acquire the goal. E.g. December 2012 I will own my home.
Goals that are written down concisely are met. Goals that you pay attention to are met. Goals that you are focused on are met. When you set a goal you need to do daily checks; look at what you have done today towards meeting the goal.
Writing your goal down in a note-book is one of the most important things you can do.
You begin by writing the date and your name. I also write down the time of day.
This is the beginning and you can go over your goal until you are perfectly clear this is exactly what you want without a doubt. Go over the description of the goal, write and rewrite always dating the day you are making the changes. I usually keep this very private my discussion is only with the WHO ELSE IS INVOLVE in attaining the goal
.
If you happen to discuss your goal with someone and they are filling your mind with doubts, stop the discussion and move on. You want someone to be supportive not negative.
Next, decide when you want to reach this goal. Be careful to be realistic; you do not want to set too short a time frame to attain this goal. This is where honesty to you comes in. Do not set a time to attain this goal that you know is not realistic. Remember this can be revisited and you can change the time frame and keep your goal.
Now ask yourself some questions again making sure to write them in your note-book.
These questions can be the following:
1. What can I do towards reaching this goal?
2. Can I do this all alone or do I need outside help?
3. Do I need the help of a professional?
4. How will attaining this goal affect my future?
5. How do I feel when I think of attaining this goal?
6. Am I tracking to reach this goal on time?
These questions can change at any time by the circumstances and conditions in your life. Do not fret; think of it as if you going on a trip and coming across a road closure where you have to make a detour. You know you will get back on track later down the road. At that time you need to stay focus and see the goal being attain while working and enjoying the journey to get there.
Making a Financial Plan requires you to spend quite a bit of time working on your plan. When working with a Financial Planner he or she would schedule several meetings with you to go over the goals you have set. This is no different except you are working on your own. Once your plan is in place you do not have to spend every day going over it you would first look at it weekly and then monthly until you are where you want to be.
Do not be surprise that while completing this plan you begin to see other goals you can begin to work on. Stop and write them down, the river of goal setting is flowing freely within you, take advantage of it.
Remember that goal setting can be fun but you must remain passionate about what you want and when you want it.
Tessa- Marie Shillingford is the author of Controlling the Debt Monster. She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker. She is presently a Program Facilitator of Financial Literacy at JVS Toronto. Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank. During her tenure at TD Canada Trust she held various positions interacting with customers of the bank. As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com