One of the great things about being human is that we’re in a constant state of evolution. Consider how different you are today than you were five, even ten years ago. As we experience new things, our perspectives and priorities also tend to change.
Whether you view change as a positive or negative, consider it a call to action to check in with your financial plan. When your priorities shift, your greater aspirations or long-term goals may also shift. But if you’re following an outdated plan or savings strategy, your financial life will fall out of alignment.
Below, we’re exploring the financial implications of changing personal goals and what you should do to ensure your financial life meets your needs.
First, Why Do You Think Your Personal Goals Have Changed?
To better understand the shift in your personal goals, consider why things have changed in recent years.
Perhaps you’ve advanced in your career or shifted career paths altogether. Maybe you’re in the process of growing your family. Or you’ve chosen to pursue a more minimalist lifestyle and like to rethink how you spend and save your money.
As you start the process of realigning your financial decisions with your new goals, take some time to self-reflect on your journey so far and how you envision your life moving forward.
Evaluating Your Financial Landscape
Sometimes, life happens around us, and it takes a while to catch up and think about all the changes that have taken place. To better stay on top of shifts that may have occurred, set time aside each year (or even more frequently if you’d like) to evaluate your financial landscape.
Use this as an opportunity to review your monthly or quarterly budget and focus on short-term and long-term financial considerations. Do your current spending habits align with your immediate financial obligations and longer-term goals?
If you’ve gotten a raise in the past year, for example, have you adjusted your savings contributions, or are you spending more money instead? In that case, you may be experiencing lifestyle creep. Consider what changes you can make to use your extra discretionary income more effectively to better your financial life.
The most effective way to ensure you’re staying in control of your financial life is to check in and evaluate it regularly — while making adjustments as needed.
Setting SMART Goals
Say you find that your spending habits or savings contributions don’t align with your new financial focus. It’s essential to set clear, measurable goals that you can use to guide your financial planning efforts.
To do that, you’ll want to set SMART goals:
Say you’d like to save up for a down payment on your dream house. Here’s how to turn that aspiration into a SMART goal:
- Specific: I want to save $50,000 for a down payment and closing costs on my dream house.
- Measurable: I will break this goal into five $10,000 milestones to ensure I’m prioritizing this goal and saving consistently.
- Attainable: It is achievable if I adjust my spending habits and put all additional income from bonuses or pay increases toward this goal.
- Relevant: As my family grows and we look to establish roots somewhere, saving up for our dream house is a relevant and vital financial goal.
- Timely: I will work to achieve this goal within three years, putting an average of $1,388 into my house savings fund each month.
Adjusting Your Budget and Spending
Once you know how your financial life needs to realign to reflect your priorities, your next step is to modify your budget to accommodate these goals.
No matter how your personal goals change, there are a few non-negotiable financial priorities always to keep top of mind:
- Recurring living expenses (utilities, groceries, rent, etc.)
- Insurance premiums
- Debt repayment (mortgage, student loans, car loans, personal loans, credit card debt, etc.)
- Saving for retirement
- Building an emergency fund (typically, about six months’ worth of expenses)
Once you have your top priorities taken care of, the rest is considered discretionary spending. And unless you plan on increasing your monthly income (through a job change or side hustle, perhaps), you will need to change how you spend those discretionary funds.
Find opportunities to adjust your spending. Perhaps you’re paying for streaming services you don’t use or rely too heavily on food delivery apps. How could you better use those funds to address your new personal priorities? Assessing your spending and finding opportunities to reallocate funds away from areas that don’t align with your changing priorities is essential.
Investment Strategies for Changing Goals
So far, we’ve focused on savings goals, but your investment strategy may also need to be adjusted. Perhaps your timeline toward retirement has shifted, in which case your risk tolerance will change. Or, you’d like to pull from your investments to cover college tuition for your kids.
Any change you make to your portfolio should be done thoughtfully and carefully — ideally with your financial advisor’s assistance. They can help you understand how your new goals may impact your risk tolerance and what changes make the most sense based on your new priorities.
Flexibility and Continuous Review
Just as you’ve experienced changes to your life in recent years, you’ll likely continue to evolve in the years to come. Events like marriage, childbirth, divorce, career changes, medical diagnoses, or loss of a loved one are every day — and they can have a significant impact on your personal goals and financial priorities.
Along with periodically reviewing your financial situation and making strategic adjustments, adopting a flexible and agile attitude toward your financial plan is essential. Because money is such a personal aspect of a person’s life, it can sometimes be hard to change it. But to be proactive with your financial journey and ensure it reflects your most authentic self, you must be adaptable and willing to adjust course as your circumstances change.
Experiencing Exciting Changes in Your Life?
Adjusting your financial plan to meet your changing needs is a quintessential reason people work with a financial advisor. Your advisor knows to ask you about your shifting priorities, and they can identify opportunities to realign your plan with your new personal goals. Through expert guidance and tailored strategies, your advisor can assess your portfolio and make the necessary adjustments — all while helping you feel comfortable and confident in the changes that are taking place.
Despite common misconceptions, financial advisors aren’t just for people in or near retirement — nor do you need to be a multimillionaire to work with one. Advisors are dedicated financial professionals who can help you make sense of your current standings and build a custom plan for moving forward in the right direction. Anytime you feel you may be straying off course (or need to shift directions altogether), your advisor can help.
Evolving personal goals is a natural part of life, and adapting your financial plan is essential to aligning with your new aspirations. Anytime you feel your personal goals or life circumstances evolving, we encourage you to evaluate your financial situation alongside a trusted financial professional.
Interested in working with our team? Reach out anytime to learn more about Partners in Financial Planning and how can help you feel financially confident at any stage in life.
Partners in Financial Planning provides tax-focused, comprehensive, fee-only financial planning and investment management services. With locations in Salem, Virginia and Charleston, South Carolina, our team is well-equipped to serve clients both locally and nationally with over 100 years of combined experience and knowledge in financial services.
To learn more, visit https://partnersinfinancialplanning.com