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Tag: Goal Setting

Delayed Gratification

Can delayed gratification help you with your finances?

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Delayed Gratification

The “marshmallow test”

Instant gratification was first explored about 40 years ago by psychologist, Walter Mischel, in what has become known as the ‘marshmallow test’. This experiment tested children’s ability, or inability, to curb their urge to have one marshmallow immediately (instant gratification) rather than wait and receive two marshmallows, as promised to them, at a later time (delayed gratification).ii

This test still seems relevant today, so it’s not surprising that many of us choose to eat our marshmallow now, rather than wait, and possibly get a bigger reward at a later date.

In today’s materialistic, throwaway society, we’ve been bombarded with messages convincing us that instant gratification makes us feel better. Combine that with the pace of modern life giving us easy access to credit and rapid changes in technology, instant gratification is tempting us all.

But while instant gratification might make us feel good for a while, it may not help us achieve our longer term goals.

Delayed gratification has its own rewards

Delayed gratification, by exercising self­control, allows you to resist the urge to have an instant reward now with the aim of a better reward down the track.iii

For example, you could give up your daily coffee and put the money aside to save for your next holiday, go without sugary treats to help you lose weight, or contribute to your super to help you save for a comfortable retirement.

And while exercising self-control isn’t easy, resisting temptation can have its own rewards, such as imagining how you can indulge yourself once you’ve finally achieved your goal!

How to use delayed gratification to help with your finances

The next time you want to impulse-buy online or at the checkout, pause and think about whether you really need to spend the money now. Divert your impluse and think about what you could do with the money instead.

Some ways you could use delayed gratification to help achieve your longer term goals:

  • Save up enough money before making a purchase to avoid credit card debt or a personal loan. When you do run up a debt, make sure you can afford to pay it off when the bill comes in or try
    to pay it off as soon as possible.
  • If you invest in a term deposit, don’t get tempted to take it out before the maturity date. Savour the wait so you don’t lose the interest you’ve earned.
  • If you’re saving up a deposit to buy property, try to save up for a bigger deposit so you’ll potentially borrow less in future. Of course, this may mean you are vulnerable to future market or price changes.
  • Reinvest any dividends you might get from your shares to increase your total number of shares-this could potentially give you greater returns in the longer term.

Take control of your future

Exercising delayed gratification can help you to take control of many aspects of your life, so why not start with your finances?

Whether your goal is to be debt-free, save enough to buy a property or to have a comfortable retirement, we can help you. Call us for professional advice on how to achieve your financial goals.

 

Need some help getting started?

Whether your goal is to be debt-free, save enough to buy a property or to have a comfortable retirement, we can help you. Call us for professional advice on how to achieve your financial goals on 02 9328 0876.

 

Article by © AMP Life Limited.

 

i https://www.apa.org/helpcenter/willpower-gratification.pdf
ii https://www.apa.org/helpcenter/willpower-gratification.pdf
iii https://www.psychologytoday.com/basics/self-control

 

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

 

Get your sheep in order

Get Your Sheep Together

Written by on . Posted in Goal Strategies. No Comments on Get Your Sheep Together

Get your sheep in order

The question is…why? Why can’t I just chill out, roll with the punches, play things by ear? Like most character traits in a mature (I think mature) adult, this part of my personality has evolved through countless life experiences. I’ve missed out on events, failed exams, underperformed at work and let my friends and family down. 

That is until I got my life in order…

 My philosophy is that by looking after the cents the dollars look after themselves; that the bigger picture is clearer when the smaller things aren’t allowed to spiral out of control. By having a degree of organisation in the day-to-day, I don’t lose sight of the long term. In other words I can focus on the big picture…my goals and dreams.  I guess the great German philosopher Friedrich Nietzsche said it best when he pondered

“to forget one’s purpose is the commonest form of stupidity”.

Whilst I understand we all have unique personalities and find what works well for us through experience, I cannot understand why people choose to maintain a life pattern of disorder when it is relatively simple to establish procedure and process to ensure a smoothly functioning life.

The most amazing thing I’ve found is that once we set up a system to deal with the daily, weekly, monthly, and annually occurring events in our lives, the curve balls we’re thrown are much more manageable! And what this achieves in my life is a sense of being in control, and the peace of mind in knowing that I haven’t forgotten or overlooked anything.

This of course includes my finances. In fact, this is one of the most important factors in life to address in a modern world. This can be done by simply completing and sticking to a household budget. This allows us to know when we can afford luxuries like a holiday or a meal at an expensive restaurant….and when we simply can’t! It also gives us peace of mind that those large regular expenses like registering the family car have been planned for, and money put aside during the year to address.

Whilst not everyone will achieve the heights of anal retentiveness that I pride myself on, they can certainly take the time to work out if they are living beyond their means. Knowing where your money goes and how this helps you to maintain the lifestyle you want is the most fundamental part of having a plan for life…a financial plan.

Wouldn’t it be great knowing you have control of your life and your future? Wouldn’t that alone make life more satisfying? I certainly believe so…enough to have made it the foundation of my day-to-day life.  And because I have the daily chaos of living mostly under control by organising every controllable part of my life, I have more time to focus on the actual living part.

 

Have some bigger goals you want to plan for?

It can really help to create a financial roadmap with the help of a professional. Why not call us to arrange an appointment on 02 9328 0876.

 

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.

 

Life is here and now!

Rehearsal? Life is here and now!

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Life is here and now!

From generation to generation, the answers haven’t changed much – fire fighter, doctor, movie star or sports champ. Few of us ever follow through on this earliest example of goal setting.

Flash forward to the final days of secondary school, and the same questions start to take on a more serious face. School grades, financial realities and the looming weight of adulthood seemingly reduce the options to a more realistic field.

Suddenly, that aspiring movie star or sports champ finds him or herself pouring coffees to fund studies, then attached to a mundane desk job and wondering how the best years disappeared.

Many of us treat the vast bulk of our life as a rehearsal for a time when the universes of health, wealth and happiness converge to form our idea of paradise at some point in an indeterminable future. But, as many of our Facebook friends remind us on a daily basis via myriad motivational JPEGs and messages, life is here and now and, like our day-to-day existence, needs a decent plan to deliver on our dreams.

Only after you have clearly identified what it is you want from your life can you make good decisions regarding money and the role you want it to play. Yes, money. It’s going to be mighty hard to climb your literal or metaphoric Mt Everest without a thorough financial plan.

Today is your life as much as tomorrow, and the best approach for achieving financial freedom is one that creates a balance between the two. At the same time, don’t aim for Mt Kosciusko when it’s Everest you really want. So let’s get started:

Review your current situation

You need to be honest with yourself about where you are now. To find out where you stand financially, draw up a budget showing income and outgoings. Once you know exactly what you spend each month, you can look at how to cut costs to create additional income.

Goals to live by

Set out your goals in writing. Most people find it helps to clarify whether they really want something. It is also part of the process involved in working out how to achieve it. Expect that there will be some compromises along the way; you might like the idea of saving up to buy a motorcycle and travelling around Australia, but your partner may be dreaming of buying a beach shack.

Understand exactly what is involved as you are deciding both the final outcome and the journey involved in getting there. In other words, your long-term goals determine how you will live your life today.

Be prepared for the unexpected

You may also need to adjust a goal to reflect what is happening in the outside world, or alter what you are doing to ensure your goal is reached as originally planned. To combat this you need to regularly review your strategy and monitor where things are headed, and also prepare for that rainy day when something unexpected happens.

At the heart of this process, never forget that time in your childhood when you dreamed of being that movie star or sports champ. With our help incorporating your goals into the financial planning process, you can still live out your dreams, whatever they may be.

 

Still have some questions?

If you want to discuss your financial future and plans one of our advisors, book a coffee or call us to arrange an appointment on 02 9328 0876.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

Investment Goals Setting

Investment goal setting

Written by Sydney Financial Planning on . Posted in Investing. No Comments on Investment goal setting

Investment Goals Setting

Planning for your goals when you invest means giving yourself the best chance of success.

Without a plan, it’s easy to get distracted by daily headlines. You can end up reacting to the news, timing the market, chasing returns and missing out on long-term gains.

With a plan, you know where you’re heading because you have a map. Along the way, you may not know exactly what each day will bring or have control of everything but a plan will keep you focused on your goals.

1

Quantifying your goals

The best way to define your goals is to make them time and dollar specific. This means we assign them a timeframe and the dollar figure we’re going for. If you have multiple goals (for example, paying for both retirement and your child’s education expenses), each needs to be clearly defined and accounted for.

This step is often skipped as investors tend to quickly jump to solutions. However, defining your goals delivers clarity and a sense of ownership over your investment plan. We work with you to help you get this right. People don’t come to us with clearly defined financial goals, so don’t feel pressured into feeling like you need that clarity before seeking financial advice. Client goals are born in our first meeting.

2

Constructing your investment plan

With clarity around your goals, it’s possible to move on to establishing a plan to achieve them. This involves working out the initial and ongoing regular dollar amount to invest and a suitable investment strategy. These will depend on the specifications of your goals and are prepared by your financial planner. Your planner will explain the reasons behind the recommendations as well as suitable products that will fit your plan.

Because most objectives are long-term, your investment plan should be designed to endure through changing market environments, and should be flexible enough to adjust for unexpected events along the way.

A sound investment plan can help you to practice healthy investor behaviour, because it demonstrates the purpose and value of asset allocation, diversification, and rebalancing. It also helps you to stay focused on your intended contribution and spending rates.

3

The danger of lacking a plan

Without a plan, investors often build their portfolios from the bottom up, focusing on each investment holding rather than on how the portfolio as a whole is serving your objectives.

Another way to characterise this process is “fund collecting”: Investors can be drawn into evaluating a particular fund or other type of investment and, if it seems attractive, they buy it, often without thinking about how or where it may fit within the overall asset allocation.

While paying close attention to each investment may seem logical, this process can lead to a collection of holdings that does not serve your ultimate needs. As a result, your portfolio may wind up being under diversified (all your eggs in one basket) or you may end up holding a whole lot of expensive double ups (over diversification).

With no plan to focus on, investors are led into such situations by common, avoidable mistakes such as performance chasing, market timing, or reacting to market “noise.” They are moved to action by the performance of the broader equity market, increasing their equities exposure during bull markets and reducing it during bear markets. Such “buy high, sell low” behaviour has been well documented and caused by our hard-wired emotional response to fear, rather than a rational one.

4

Staying focused on your goals

Once the plan is in place, it’s revisited on a regular basis so you can track your progress.

The future will not go exactly according to plan and that’s ok. It’s not about getting things exactly right about the future because we can’t. Your investment plan will, at some point, inevitably become an outdated map. The landscape will change. That’s life.

Our ongoing planning process will ensure we address things as they come up. We’ll communicate with you on a regular basis, sometimes more frequently than other times.

 

Having us on your side means we won’t continue to defend the outdated map but instead will be your guide in the ever-changing landscape. We’re here to make sure you’re heading the right direction. We’ve got you.

Every now and then you will have a tendency to listen to ideas that can hurt you financially. We believe investors should employ their time and effort up front, on the plan, rather than in ongoing evaluation of each new idea that hits the headlines. This simple step can pay off tremendously in helping you stay on the path toward your financial goals.

So, whether it’s a new car, education expenses or a comfortable retirement, if you keep your eyes on the end goal, you’ll stand more chance of reaching your destination and achieving investment success.

The most important step is to begin.

 

 

How does your investment goal strategy look?

If you want a fresh look at how to reach your investment goals, book an appointment with one of our experienced planners, contact us on 02 9328 0876.

 

 

Article by Sydney Financial Planning

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.

 

 

5 habits to become financially secure

5 habits to become financially secure

Written by Sydney Financial Planning on . Posted in Financial Strategies. No Comments on 5 habits to become financially secure

5 habits to become financially secure

Believe it or not, being secure financially doesn’t involve magic or an outrageous stroke of luck.

More often than not, it results from good habits, such as keeping track of your finances, cutting back on expenses, and planning ahead.

Here are five habits you can develop

That will help you become the awe of your friends and family!

1

Set Goals

It’s time to take control of your financial security and a great place to start is to identify short, medium, and long-term financial goals.

These might be saving for a family holiday, making additional contributions to your superannuation, paying off expensive credit card debt, or just keep it simple and save a set amount each pay-day.

 

2

Regular check-ups

Creating a budget is an incredibly important step to achieving your goals as you work towards your financial security.

Rest assured it’s easier than you think using a good budgeting tool. And there are plenty of helpful apps and websites out there to choose from. We tested a few and liked the simplicity of ASIC’s MoneySmart Budget planner.

  • Calculate your household’s monthly income: Look at your payslips or bank statements to see how much is going into your account on an average month.
  • Tally your monthly expenses: Check your bank statements, bills, and receipts to see how much you’re spending. Don’t forget to factor in the big ticket items you purchase less often.
  • Remember your goals: Make an allowance to put some of your income aside to achieve your goals. Can you afford to save 20% of your income or do you start a bit lower?
  • Crunch the numbers: You’ll now have a summary of how much you’re saving, or losing each month. Don’t forget to save a copy.
  • Find saving measures: Boost your savings, identify and cut back on unnecessary expenses. That might include take-away coffee, restaurants, or subscription services you rarely use.

The first few months of sticking to your budget will be the toughest, so start by setting a realistic budget. Sticking to consistent saving will mean that you can build up an amount that can be used for a significant goal, like paying off a car loan, or saving a deposit for your first home.

 

3

Optimise your bank accounts

Give your saving efforts a big boost with the checklist below:

  • Streamline banking – Get paid into an account that’s not accessible by debit card. Pay off your monthly essentials first, such as rent and utilities, then transfer your budgeted savings into a separate account.
    Finally, only put as much as you’ll need in a spending account. That’s this month’s budget.
  • Bank fees – How much are fees eating into your savings and spending accounts? If you don’t know, find out, then shop around for a better deal.
  • Credit cards – Tackle your outstanding credit card balance, check to see if you own any credit cards you no longer need. The sooner you can stop using them and pay off the balance the sooner you will have extra money to put towards your goals. Remember late payment fees and interest can really put a dent into your savings.

 

4

Track your spending

You need to keep your eye on the ball at all times. That’s because it’s one thing to create a budget and set financial goals, but entirely another to stick to them.

So set aside 15-30 minutes each week or fortnight to make sure you’re keeping on track. This regular review is also a good opportunity to identify any expenses you don’t really need. Your streamlined bank accounts should
make this very simple to track your progress.

Notice the spring in your step if you’ve stuck to your budget and saved towards your goals. Remember how good that feels!

 

5

Plan for the unexpected

Your income is fundamental to achieving your financial goals, so for financial security, you should be confident that you have adequate protection in place.

Ask yourself how quickly you would burn through your savings if you were unable to work for three to five months? Or even longer?

By having different types of insurance you can help protect yourself and your family when you need it the most.

Taking out the right cover for you means that you can be confident that if something unexpected did occur, your efforts to become financially secure are protected.

 

 

Would you like to explore options to help meet your financial goals?

Connect with one of our planners to review your current financial position, either book a virtual meeting or call us on 02 9328 0876.

 

 

Article by Sydney Financial Planning

 

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.

Photo by Fuu J on Unsplash

Create Realistic Goals

How to create realistic goals… and stick to them

Written by Sydney Financial Planning on . Posted in Goal Strategies. No Comments on How to create realistic goals… and stick to them

Create Realistic Goals

When it comes to the big things in life we all have our goals. Getting promoted at work. Educating the kids through school. Saving for a comfortable retirement.

It’s important to aim high. But if the goals you set are overambitious, with no checkpoints along the way, you could be setting yourself up for disappointment. So it may be a good idea to make sure your goals are realistic and achievable.

One area where setting goals can be beneficial is health and fitness—whether it’s losing a few kilos at the gym or aiming for a PB at the next half-marathon.

Check out the video below, where corporate health consultant Jack Hemnani talks about how he helps his clients set realistic goals and stick to them.

 

Think short, medium and long term

Your finances could benefit from the same treatment as your fitness. When you’re saving and investing your money, you need to know what you’re aiming for.

Think about how much you earn and how much you spend. Are there any ways you could cut down your spending to allocate more money towards your goals?

It could also be a good idea to make your goals and timeframes realistic, and set interim targets. Let’s say you’re saving $25,000 for a new cari:

  • You could set yourself a realistic short-term target of saving $5 a day by going without a coffee or bringing lunch to work, and set up automatic debits to a high interest savings account.
  • You could set a ‘trigger’ amount for the medium term—say $1,000—and when you reach it you could consider rolling your savings into something that may generate higher returns, such as a term deposit or a diversified investment option.
  • You could start planning your next long-term challenge once you reach the magic number of $25,000 and achieve your goal—after rewarding yourself, naturally.

And different goals could benefit from different approaches.

When you’re putting money aside for retirement, superannuation could be an effective tax-friendly option to boost your savings, depending on your circumstances.

But with super, your money is locked away until your preservation age. So if you’re looking at achieving a more short-term goal—like saving up to buy a new car—you may need to investigate other options where you could access the savings sooner.

Six steps to creating your financial goal checklist

1

Big picture.

Think about your overall long-term goal—this may not necessarily be financial but more about how you want to live or how you want your family to live.

2

Magic number

Work out how much money you’ll need to achieve your goal.

3

Small steps

Look at the incremental steps you need to take to achieve your goal—you may feel more motivated to achieve bigger goals if you set checkpoints along the way.

4

Write it down

Try this…just for a second. Close all your apps, put down your smartphone, pick up a pen and paper…and write it down. It’s amazing the effect that putting something down on paper can have on your motivation, especially in a digital age. Sure, you can then get on to your laptop to set up some useful spreadsheets and reminders. But you’ve got a written record to remind you.

5

Back on track

Here’s the thing. You might initially fail. As a wise manii once said, ‘Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.’ While there might be ways you can stop yourself going off piste—such as transferring a set amount to your savings account when your pay cheque comes in—it’s a good idea to work out how you’re going to get back on track when you (inevitably) fall over.

6

You deserve it

As humans you can say we’re hardwired to expect a reward. So you might want to treat yourself when you reach your goals—every step along the way

 

Is it time to get some extra help with goal planning?

Why not book an appointment with one of our planners to help you gain momentum, contact us on 02 9328 0876.

 

i The case example is illustrative only and is not an estimate of the investment returns you will receive or fees and costs you will incur.
ii Irish novelist and playwright Samuel Beckett.

Article by – AMP Life Limited. First published 09 July 2019.

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.

Day One - Budgeting

How to turn One Day to Day One – Budgeting

Written by on . Posted in Budgeting. No Comments on How to turn One Day to Day One – Budgeting

Day One - Budgeting

We’ve heard it all before. It’s not that we don’t want to take control of our money. I mean it makes sense – we all work so hard for it, it would make sense to know what happens to it once it hits our bank account. Even better if it went to all the right places. 

But the reality is, it JUST GETS TOO HARD!!!

That is all true, but…you don’t have to go from zero to 100 in one day. You can just start somewhere basic, get used to it, then move on once you’re comfortable. Doing something is always better than doing nothing. 

Here’s something you can do today, 5 simple steps:

Step 1 – think about all the reasons why you think you should get in charge of your money

Would it mean more cash for travelling? Would it make you less stressed? Maybe more fun money for going out? Maybe just have a regular cash reserve so you don’t have to dip into your credit card every time? Maybe it’s time to finally start paying off some debts…?

Whatever it is, you need to be clear on these reasons. Once you have the clarity, write it all down. (make sure you don’t skip this step, writing down is an important step).

Step 2 – think about all the stuff you just wrote down

 Rate all the reasons based on their importance. Are some of them more important than others? What would it mean to never achieve some of them? How would it make you feel? 

Step 3 – time to pause and think.

 You’ve just articulated all the reasons why you want to be in control, and how bad you’d feel if you never got there. It’s time to ask yourself – What have I done about it so far?

Step 4 – if the answer to the last question is ‘Not much’, what do you think you should do now?

Are you really going to change something after reading an article like this? That’s right. Knowing we should do something doesn’t mean we actually end up doing it. It’s human nature. Well, if you won’t change something, nothing will change. You know you won’t do it alone.

Step 5 – Ask for help

Asking for help isn’t a weakness. It’s called being smart and doing something different to people around us. It’s the only way not to end up like everyone else around us.

Procrastinating, getting distracted, being busy – it’s all human but it all stands in your way to move ahead. It’s ok to ask for help, it’s ok to talk to a third-party financial expert. They’re not going to bite your head off and I can promise you one thing – you’ll know you when you find the right one. You’ll look back one day and go ‘what took me so long!?’.

If you change nothing, nothing will change. Change ONE DAY… to DAY ONE!

 

Do you need some help with creating a new day one?

Send us a message if you want to ask anything. Make a booking or call us on 02 9328 0876 to arrange a meeting.

 

Article by Michal Bodi | Senior Financial Planner

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.