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As 2021 nears, it is the time for new financial resolutions. 2020 was the year that no-one was expecting. Any resolutions you may have had at the beginning of last year may as well have been written in sand. Not many of us could have been sure what surprises the year had in store, to shake up our goals and plans.
This New Year may feel a little different, knowing that a pandemic can meddle with even the most certain of schemes. No matter what 2020 served you, the idea of a new year is still an exciting time, as people begin to dust themselves off and resolve to make some changes for the better. How do you see a new year through financially when you do not know what is around the corner? Here are some strategies to put in place to help make 2021 your comeback year, no matter what the year holds.
Setting Financial Resolutions – Everyone’s Story Is Different
Everyone has a 2020 story. While some may hold lighthearted laughs about a lack of toilet paper in the house, for many others the situation was and may still be tough and in need of repair or a new perspective. Financial resolutions for the new year are important and are going to vary dramatically. Some people may be focusing on new opportunities that have arisen, while others may need to change their lifestyle or adjust some goals that had set in place earlier. Some may be planning for retirement, while others are planning to start a family.
Although there isn’t a financial resolution that fits everyone’s objectives, there are a few basic elements that need to be acknowledged when considering writing up your goals:
Financial Resolutions – Be Adaptable With Your Strategies But Stubborn With Your Goals
Everyone can assume that after a year like we’ve had, learning to be flexible with our future plans is vital. This doesn’t mean that our objectives that are important to us need to change. You may just have to adapt the journey along the way. It is crucial to meet with a trusted financial advisor when discussing objectives and life goals in an ever-changing financial climate. This ensures you have current information and are on track with your financial resolutions, whilst keeping realistic with time frame and other developments.
You Might Not Be Able To Hit Reset At The Beginning of 2021
Life has changed over the course of the year and we are not quite through the storm yet. This coming year may not feel like a clean slate or a blank canvas, so it’s important to let go of the ideal that we can start over and instead implement some changes that are realistic and effective, to begin to take some control in tumultuous times.
When setting goals, or financial resolutions, a helpful method is called SMART and can apply to everyone:
To make sure your goals are clear and achievable, each one should be:
• Specific (simple, sensible, significant).
• Measurable (meaningful, motivating).
• Achievable (agreed, attainable).
• Relevant (reasonable, realistic and resourced, results-based).
• Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).
However, some academics have now expanded it to include extra focus areas; SMARTER, for example, includes Evaluated and Reviewed.
For example, rather than stating as a goal “I want my kids to be looked after financially in the future”, you could say, “I am going to make an appointment to develop an estate plan and review my will in February”. Or instead of “I want to get out of debt”, you could say, “I will pay off my mortgage in 10 years”. There are great online tools you can use to assist you with your goal setting. For example, you can this calculator to give you an idea of how much money you will have in retirement. Will it be enough to live on?
You could then take the next step and evaluate and review these goals with your advisor, to ensure you have success in your objectives.
Make One Of Your Financial Resolutions To Protect What You Have
This year was one big wake up call. Many people realised that having an income is not only crucial, but it can also be taken from you without warning. While Australians have a good track record with making sure their house and car are insured, a lot of individuals still haven’t stopped to consider their biggest financial asset, which is their own ability to earn an income.
Personal insurance can protect your income earning ability and provide security for the future. You might think that personal insurance premiums aren’t welcome in your budget, however many premiums can actually be paid through your superannuation. It’s vital to obtain the right advice to know that you are properly insured in the event of a life changing incident or illness. Protecting what you have and your ability to earn an income is a smart financial resolution for 2021.
Do Not Go It Alone
If there’s anything to learn from 2020, it’s that people don’t do well going it alone. The same can be said for goal setting and keeping yourself accountable for your financial resolutions. An experienced financial planner can advise you on the choices you need to make to achieve your objectives. A good adviser will tailor a plan that will comprise advice on superannuation, wealth creation, personal insurance, debt management, budgeting, property strategies and estate planning.
A trusted advisor will give you peace of mind and an assurance that no matter how bumpy the road, you are on the right track.
This December 31st take time to celebrate the coming year and congratulate yourself for getting through the year that was. If you are tough enough to withstand 2020, with the right advice and support, 2021 could be the year that you take control and gain some wins. Call 02 4038 1623 to talk to a financial advisor today and make 2021 count.
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