I am a major fan of sunk cost theory. At its simplest, this means that it doesn’t matter how much you have invested in a project (or anything, whether financial or not), you must assess your position afresh to decide where to go from here.
The world is littered with people that keep throwing good money after bad, thinking that they must keep going because of how much they have already invested in something.
The new financial year is a great time for a fresh start; what’s been done is done. Let’s begin a new financial with a fresh and positive attitude and a reassessment of our goals and way forward.
It’s important to stay motivated and have achievable goals in place at the start of a new financial year and to put them in writing.
Once you have your plans in writing, this should be placed somewhere visible to you every day, like at your work desk or on the fridge, to provide the physical reminder amid the inevitable daily ‘noise’ that interferes.
Without knowing what you would like to achieve and then setting realistic goals, your chances of stumbling on the outcome you’re looking for is remote as best.
Here are some of my best tips for setting achievable financial goals:
1. Review your goals from prior years
Make sure that you review your goals each year to see if your personal plan still reflects your goals. Work out what you have done well and what you need to work on. A realistic assessment is needed and it is often useful to get the views of a mentor, trusted colleague or friend to provide you with the necessary third party perspective. Having goals in of themselves are meaningless unless there are action plans to achieve them with deadlines set for measuring and monitoring your progress.
Just like a business review business plans to monitor effectiveness, we have to think in the same way as individuals. Regular monitoring reviews allow you to break down your goals into smaller and more achievable ones with an opportunity to take action to put the overall plan back on the track when required.
2. Expect surprises
Even the best laid financial plans can be knocked off course by something unexpected. Make sure you have some contingency in your financial budget to allow for this across the year.
Goals should not be easily achievable, they must be a stretch. But they also cannot to be overtly unrealistic, otherwise you will very quickly become demotivated when you fail to reach them.
3. Be positive
Negative thinking is often less negative thought than it is an excuse for not taking action. What happens in life happens, and what you can change is the way you perceive and evaluate those things and their effect on your goals.
It is up to you to find the good things and be positive regardless of what is happening around you. Do not allow problems and difficulties to overpower your mind and mood. Don’t rely on others for this, at the end of the day you choose your mood and your outlook. No one else will care as much about your success as you. Having said that, as the saying goes, do surround yourself with good people that will provide you with positive energy and thoughts.
We all have people in our lives that add to or take away from our energy. Some you can’t choose, but where you can you should.
4. Get organised and disciplined
It is an opportunity to begin anew with all your record keeping and then when it comes to the end of the financial year, you will have everything ready rather than having to trace the receipts.
Spend a short amount of time each week or each month organising your paperwork. Set up an excel spreadsheet or use one of the many apps now available to record your expenditure and find a way to store your receipts.
The longer you wait to do something, the more difficult it will be. Putting in the effort to get things done will lift the weight from doing it later.
5. Financial and Super planning for retirement
There is no doubt that the younger you start, the better. But there is also no doubt that even for those that are closer to retirement, having a well-constructed plan will inevitably mean a better outcome than if one does not exist at all.
6. Ask professionals
Find an expert who can help you take the next step and help identify areas of improvement to make your life easier.
If you visit your advisor or financial planner after the end of the financial year, it may be too late to change something if you need to. Thus, it is worth seeing your trusted advisor early during the year.
For more advice from Anthony Bell, visit bellpartners.com