Why it’s important to focus on goals rather than money in your financial plan

From a young age, you were likely aware of the importance of saving for the future. Having some cash set aside for a rainy day – and later on, investments for longer-term goals – makes good financial sense.

How often, though, have you stopped to think about what exactly you are saving up for?

While money can’t necessarily buy you happiness, it can help you to achieve the goals you have in life. That’s why focusing on what you want out of life can be a much more helpful way to plan your finances than by solely focusing on adding more money to the pot. 

Chasing money itself is likely to lead to dissatisfaction

A certain level of income is of course necessary to pay the bills and put some savings aside for the future. Once you have attained this, though, research suggests that having a much higher income is unlikely to lead to a significant increase in happiness.

CNBC reports findings that people who value time over money tend to have better social connections, healthier relationships, and greater job satisfaction.

Additionally, the report found that 75% of some of the world’s wealthiest people (those with a net worth of $10 million or more) felt they would need “a lot more” money to be happy – showing that it’s not money itself that brings happiness.

So how can you ensure that the money you earn and save actually improves your life? The answer lies in how you use it. 

Research shows that over-55s value experiences over material possessions

According to research by Royal London, 72% of over-55s value experiences over material possessions, and 52% said that spending time with their family was their most important goal for retirement.

Some of the main worries that the survey uncovered included:

• Staying fit and healthy

• Having enough money to get by, or afford the lifestyle they wanted

• A lack of experiences

• A lack of purpose.

So, even though money does play a role in your retirement plans, it’s not the end goal; rather, it’s a tool that could help you to feel secure and tick off some of those bucket list wishes.

While it’s prudent to plan for things like reducing your debts and being able to pay for later-life care, it’s also important to include some more colourful goals that make you smile when you think of achieving them. This might include:

• A round-the-world trip with your partner, friends, or family

• Eating out in your favourite restaurants

• Taking up a new hobby like flying, sailing, or horse riding.

Whatever you plan to do, make sure you’re focusing on what would make you truly happy rather than what you think you might be able to afford. By switching these around, you can make sure your financial plan brings joy into your life as well as financial security.

Your goals can provide a helpful starting point for an effective financial plan

When you know what you want out of life, you can use this understanding as a starting point for creating a financial plan that will help you achieve your goals. Rather than falling into the trap of endlessly building wealth without ever getting to enjoy yourself, you can join the ranks of those who are taking proactive steps to be happy now and in the future.

Your financial planner can help you to do this using cashflow forecasting. This is a tool that enables you to visualise how much income you will need to achieve the lifestyle you desire so that you identify any potential shortfalls and address them before they occur.

Your planner will enter data into the software such as your current income, assets, and expenses, your desired retirement date, and the annual income you’ll need to maintain your lifestyle. They will also make assumptions about inflation and investment returns.

The software will then produce an easy-to-read visualisation of the data so that you can feel confident in your ability to comfortably achieve your goals. 

Get in touch

If you’d like to learn more about how we can help you to use your wealth to create a lifestyle you love both today and in the future, please get in touch. Email theteam@fortitudefp.co.uk or call us on 01327 354321.

Please note

The Financial Conduct Authority does not regulate cashflow planning.

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.