Overwhelmed by your finances? Follow this method for setting realistic money goals

One of the biggest reasons people feel stressed about money is that they don’t have enough clarity around their own finances. Here, a financial advisor shares how to become more on top of your finances through clever planning.

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Lockdown provided us with ample opportunities to reassess our finances, as many people’s spending habits were transformed by the increased amounts of time we spent at home. From learning to invest in stocks and shares, to thinking more about pensions, women in particular have taken more interest in becoming financially smarter.

Young people are becoming more interested in money too, using one of TikTok’s most-loved trends, the art of manifesting, to hone their interest. Manifestation is an attempt to speak something into existence, whether that’s a romantic relationship or a new job. And over the past few months, money has become the focus of many people’s manifestations, with the tag #moneymanifestation reaching 29.1 million views on TikTok.

Money manifestation involves using various techniques to bring more money into your life. These techniques include chants that TikTokers recommend you should listen to and/or chant yourself regularly, as well as hacks such as not folding notes in order to ‘respect’ your money and learning money manifestation codes to write down and repeat. 

“I don’t think anyone should rely on money manifestation as a financial plan,” says Lisa Conway-Hughes, a chartered financial advisor. “However, thinking about the kind of things you would like to manifest and developing a healthy, positive relationship with money, which most people sadly don’t have, can only be a good thing.” 

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Lisa continues to explain that developing a healthy relationship with money comes from having as much clarity around your finances as possible. “One of the best ways to do this is by developing short, medium and long-term plans for your finances that covers things like property, your career and your earnings,” Lisa says.

Becoming conscious of your finances and money goals in this way is a very practical way of manifesting. You may not be speaking things into existence purely by saying them, but by being completely aware of what you want when it comes to money, you’re more likely to be able to find ways to get it. “If you can see clearly when you might be under any financial pressure, you can plan for it as early as possible,” Lisa explains.

“Read your goals regularly and tweak them over time to help yourself stay familiar with what you want,” Lisa says, adding that “it can be a good idea to re-look at your goals and decide if you want to change them once a year.”

Here, Lisa explains how you can construct a financial plan based on your personal and professional money goals, as well as how to use it to help you feel more positive about money. 

Ask yourself, is what I’m earning going to give me the life I’m planning on having?

How to plan your short-term money goals

“Your short-term plan should be anything between now and the next five years,” Lisa says. Your short-term goals will probably be the most detailed and they’ll also be the goals that are most likely to happen, according to Lisa.

Some short-term goals you might want to address include:

  • Getting out of any debt that isn’t a mortgage
  • Saving between three and six months of your usual outgoings

Your short-term goals might also look at the ways in which you want to live your life including doing things like taking a year abroad, setting up your own business or buying a house. You should also start to map out how you think your career is going to progress, as well as your property goals. “Ask yourself, is what I’m earning going to give me the life I’m planning on having?” Lisa says. 

How to plan your mid-term money goals

“Your mid-term plan should be anything between the next five to 15 years,” Lisa says.

“Most people, especially women, are under the most financial pressure in their 40s because if they’re going to have kids, they probably have kids at this point and they also might have parents that need looking after,” Lisa says.

If you are out of debt and have between three and six months of money saved, it can be a good idea to start investing now for your mid-term goals. “You should never invest money that you want to spend in the next five years because you risk the markets going down,” Lisa says, explaining that it’s better to invest for mid and long-term goals.

You can also start to think about how long you think you’d like to work – maybe you would eventually only like to work part-time or you would like to set up your own business. 

How to plan your long-term money goals

“Long-term goals are anything after 15 years,” Lisa says. These goals might seem pretty far away and they’re also likely to change but Lisa explains that it’s good to have something to work towards. “Be flexible with your goals and accept that they will change over time – when you realise that they are changing, you can adjust your plan accordingly,” she adds.

“A long-term goal that everyone needs to understand as early as possible is retirement planning,” Lisa says. “As a rule of thumb, whatever you want to spend per year in retirement, you’re going to need 25 times that.”

Lisa recommends that you use online retirement calculators to help you understand what you need to do now to prepare for your retirement. 

If you’re automated, you don’t need to be motivated

How to ensure you’re setting practical goals

If you don’t know where to start when it comes to setting these targets for yourself, Lisa recommends using the SMART method.

SMART stands for specific, measurable, achievable, relevant and time-bound. “Check in with each of your goals and make sure they’re meeting each of these requirements,” Lisa says.

“You should also do as much research as possible and speak to other people who work in the same industries as you,” she continues. “Speak to people who are older than you and have achieved some of the things you would like to achieve to get their advice.”

You can write down your goals however you’d like, whether that’s in a notebook or digitally. The most important thing is that you start to implement them as soon as possible. “If you’re automated, you don’t need to be motivated,” Lisa says, explaining that you should set up direct debits for savings and set up automatic pension plans very soon after you have set your goals, so you don’t lose motivation and spend that money. 

You can read more money advice at Stylist.co.uk.

  • Lisa Conway-Hughes, chartered financial adviser

    Lisa co-runs The Ladies Finance Club.

    Lisa is a chartered financial adviser and a Fellow of The Personal Finance Society. Lisa joined the financial industry 16 years ago and in October 2020 was voted Financial Adviser of the Year – London by Professional Adviser Magazine – WIFA.

    Lisa, also known as Miss Lolly, writes, speaks, tweets, and blogs on all things money related. Lisa is passionate about making financial education open to all and loves taking the jargon out of the financial world. Lisa is the author of Money Lessons and she also co-hosts the Ladies Finance Club podcast with Molly Benjamin. Together, they run The Ladies Finance Club.

Images: Getty and Lisa Conway-Hughes

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