3 Steps to Achieving Financial Goals For Your Family
If you are a parent, do you agree that financial planning and budgeting has become part and parcel of your family life?
In my coaching workshop for parents, almost everyone has told me that it becomes more expensive to live in Singapore. Food prices have gone up. Public transport is no longer cheap. Petrol prices never go down. If you are not familiar with the economic conditions in Singapore, the inflation rate was 5.4% in April 2012. I know having a family in Singapore is full of challenges.
Apart from sharing with my participants how to manage their family finances, I also work with them on how to set their family financial goals. Here is an interesting observation. Some parents shared with me that they did not have any financial goals because their household income had always been close to their household expenses. With little saving, they found it a waste of time to set any financial goals. In my opinion, this mindset should be changed because whether a family should have any financial goal should not depend on how much saving the family has. Instead, it is the financial goal that helps to determine how much household income is required and how much the family can afford to spend. Accordingly, setting financial goals is important for all families. In this article, I am going to share with you 3 steps to help you to set the financial goals for your family.
Step 1: Create a vision for success in achieving goals
In setting any financial goals, I feel that it is important for us to create our vision as to how it is like when we achieve these goals. Suppose one of your goals is to create a monthly passive income of $10,000 for your family. You can visualise how you and other family members feel when this goal is achieved. Are all of you excited? Do you see anyone in this picture? If so, what do they say to you?
You may wonder why this is important. To me, there is a saying that “success breads success”. We have to allow our mind to enjoy the success before it knows why it is important to achieve a particular goal. Do not underestimate the power of visualisation in this goal-setting exercise.
Step 2: Breakdown the goal into different milestones
From my experience, some parents do have a few financial goals in their mind. For the purpose of this article, let’s say one of them is to accumulate $1 million worth of assets. Here is the challenge. They do not know what to do next. How many of you know what I am talking about?
Here is what I suggest – breakdown the goal into different milestones so that it becomes more realistic and psychologically easier to achieve. Using the above example, if we need to accumulate $1 million worth of assets within the next 5 years, this means that we have to accumulate $200,000 each year on the average or around $16,600 each month.
Which is easier to achieve – $16,600 each month or $1 million in 5 years? Psychologically speaking, our mind will find a monthly target of $16,600 to be easier to achieve. I hope you get my point.
By the way, if you agree with me that success breads success, make sure you celebrate whenever you achieve a milestone. Your inner voice may say to you that it is pointless to celebrate small wins. I urge you to get rid of your inner voice. Celebration creates a positive impact on our mind. Therefore, even if it is a small win, celebrate the success with your family.
Step 3: Prepare that the result is not what you expect
Is it true that you will certainly achieve your goal by taking massive action? Unfortunately, the answer is no. It is possible that the result is not what you originally expected. The question is how you would respond in such cases. Do you say to yourself “I give up because it is a total waste of time”?
Here is one thing I have learnt from my mentors. There are always two outcomes for each action we take. It is not “win or lose” but “win or learn”. If we achieve the result we wanted, that is good and we should celebrate. If not, it is time to evaluate what is working and what is not and what is the lesson we have learnt. It is also the feedback time and therefore, you should speak to your coach if you have one. You could have blind spots and your coach would be in a better position to identify them for you. Change your strategy and continue taking massive action.