3 Steps to Create a Goals-Based Financial Plan


Goals — we all have them. Whether it’s our health, career, or personal life, most of us have aspirational visions of our future selves. But when it comes to our finances, creating a plan to achieve them can be difficult. Spending, saving, and investing often become reactive. However, by creating a goals-based financial plan, we can stop being reactive and put ourselves in a better position to reach those goals.

The key to successful financial planning is to set proactive goals and be specific with how much you’re allocating to each goal, how frequently, and over how much time.

Let’s get started on the three steps to create a goals-based financial plan.

1. Set Goals For Each Financial Area

There are four common categories of investing goals that require savings:

  • Retirement,
  • Buying a house,
  • College planning, and
  • Creating an emergency fund.

Paying down debt is also a common goal that lives on the other side of the balance sheet.

Set goals for each financial area and prioritize them. What’s most important to you in the short-term and how does that affect your long-term goals? For example, if you have to pay down debt, you’ll often want to prioritize that over longer-term goals.

Next, determine how much you’ll need for each goal, or at least get a general idea of how much you’ll need. Retirement income, college planning, buying a house – we all have some number in mind for these goals. From there, you can back into how much you need to budget for each goal.

2. Dedicate A Budget And Savings Process To Each Goal

Now that you’ve determined your goals and their priority, it’s time to crunch some numbers. Determine the dollar amount you can consistently allocate to each goal. Consistently saving is a key pillar to reaching your goal; making direct deposits into a dedicated investment account is the best way to make progress. For retirement and college planning, you may be able to start small. For paying down your debt, you may need to allocate more in the beginning.

Also, your budgets need to make sense for your goals. Putting 5% or 10% of your salary into an investment account when you’ve maxed-out your high-interest rate credit cards doesn’t make a lot of sense.

Finally, if you realize there’s not enough excess income available to fund all your goals, you may have to put some of your lower priority ones on hold. We can have anything in life, but unfortunately, we can’t have everything.

As you move throughout your life and career, it’s important to adapt and adjust – new life goals pop up, career changes happen, and you begin to build more wealth. Course corrections in the future are inevitable.

3. Measure And Optimize

We all know that rebalancing your portfolio to keep your investments on track is good practice. The same goes for budgeting around your goals, which is why it’s so critical to measure how you’re tracking.

Review your goals on a quarterly or annual basis to understand:

  1. If you’re on track, and
  2. If you need to make any changes from the spending, saving, and investing side of things.

This is why prioritizing is so important, because you need to be able to weigh your options when it comes to putting more or less toward one specific goal.

Need Help Creating Your Goals-Based Financial Plan?

One of the best ways to determine how you should budget, save, and spend is to work with someone who is living and breathing this information every day. If you’re going to go at it solo, determine what tools are out there to help you manage, track, and adjust. It can be as simple as tracking it in a spreadsheet or finding a simple online tool to help you accomplish your ultimate vision.

If you need help creating a goals-based financial plan, then click here to set up a quick, complimentary introduction call to see if Prana Wealth is a good fit. We do still have the capacity to take on new clients.

As a fee-only financial advisor in Atlanta, we can (and do) work virtually with clients all across the U.S. and we’re here to help you when you’re ready.

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