What do you think is the start of future success? Many times it can be linked back to when something changed. It could be a new job, it could be getting married, it could be some other large life event. Sometimes it’s linked back to the first dollar we made because we were disciplined from the start.
For many, it boils down to a well-defined, measurable, and attainable set of goals, which ultimately lay the foundation for future financial success. Vague aspirations such as “I want financial security” or “I want to invest more”, have limited worth without a well-defined plan that creates things like timelines, assessable targets, and a clear understanding of what it will take to ultimately achieve. Goals can provide us with the clarity, discipline, and motivation that is necessary to achieve the positive outcomes we are searching for on our financial journeys.
When beginning to plan your financial goals and objectives, here are some things to consider as these may have a positive impact on your journey.
The Value of Time: Time is a critical factor for investing. The longer you have to grow your money, the better. The “cost of waiting” could mean missing out on the best days in the market–forgoing most of a year’s potential returns – while trying to time the perfect opportunity or worse, falling victim to analysis paralysis and never getting started. With each day that goes by, the cost of inaction concerning your ultimate goals may increase. Time in the market > timing the market.
Risk Level: With sufficient time, your money and wealth can leverage the powerful effects of compounding interest and diversification, potentially reducing the need for higher returns and the associated higher risk to achieve your goals. Assuming greater and potentially unnecessary risk to compensate for lost time may hurt your ultimate financial goals. Start early, be consistent, and take a long-term perspective.
Inflation: Over time, inflation erodes our money and wealth’s true value. Inflation undermines our purchasing power. Understanding the effects inflation will have on your money is vital when calculating the cost of achieving your financial objectives. By investing wisely, diversifying your portfolio, and taking a long-term approach, you increase your chances of generating returns that outpace inflation and help preserve your money’s value.
The Unexpected: Life’s Surprises often arise and can have a significant impact on your financial well-being. One thing that we know for certain is that change is inevitable. Creating a plan that is flexible enough to bend yet not break, and that is frequently reviewed, will allow you to confidently make the adjustments to get back on track. Think of your goals and objectives like a compass–a reliable tool that can guide you forward from where you currently are by providing direction, focus, and confidence.
Remember, setting clear and meaningful goals is fundamental to your pursuit of long-term personal financial success. By understanding the impact of time, risk, and adapting to life’s surprises, you will be able to successfully navigate your unique path to achieving financial success with confidence.