The COVID-19 pandemic has brought a lot of uncertainty into our lives. Last month, the RaeLipskie team conducted a Q&A regarding the uncertainty surrounding the potential economic and market impacts. In addition to market volatility, the pandemic has heightened uncertainty over employment, socialization, health, and of course, financial planning.
During these times, financial planning may seem more challenging than ever. But despite the continued levels of uncertainty, it is important to set clear financial goals.
Thinking critically about your finances during uncertain times is a great way to work towards improving life and building financial security. Setting goals can be helpful not just for your financial future, but also for increasing your mental well-being as it gives you something to look forward to.
Follow these steps below to start planning your financial goals:
1. Find your inspiration
Don’t just think about what you want to achieve, but why you want to achieve it. Consider what matters to you and how you see your future.
Find your inspiration and start there.
2. Use the SMART model to establish your financial goals
During uncertain times, people often panic and make irrational financial decisions. Although this is a stressful time, it is crucial to remain calm and stay on track. Using the SMART model to create your financial goals is the best way to avoid making poor financial decisions and ensuring that your goals remain strategic during this unprecedented time.
S – specific
Once you have found your inspiration, you will need to clearly define your goals and make them as specific as possible. For example, “save for retirement” is not a specific enough goal. Instead, your goal could be to “save $10,000 for retirement by the end of each year.” Being specific about your goals allows you to create an action plan and figure out exactly how you’re going to achieve them.
M – measurable
For a goal to be effective, it must be measurable. If your goal is to save $10,000 for retirement by the end of each year, you can measure how much money you need to set aside every day, week or month. Having a measurable goal allows you to monitor your progress and make sure you stay on track. This will help ensure that you stay focused and meet your deadlines.
A – attainable
We all have big hopes and dreams, especially when it comes to money, but your goals must be achievable. Setting a goal that is unattainable will only lead to disappointment. Consider all the financial factors in your life and how your finances have been impacted by COVID-19, including assessing your income, taxes, etc.
R – realistic
To make your goals realistic, you need to consider every aspect in your life – from finances to personal factors. Again, you also need to consider if your goals are realistic during the current COVID-19 pandemic. Some goals may need some tweaking to make them more realistic, but during this time of uncertainty, it is especially important to have some flexibility with your goals. Be flexible and make changes as necessary – while being realistic.
Remember, your portfolio manager can work with you during this unprecedented time to ensure that your financial goals are attainable and realistic.
T – timely
Finally, effective goals have a timeframe. Adding deadlines to your goals not only allows you to measure your progress, but it gives you something to work towards. You need to consider if your goals are short term, mid term, or long term. Short term goals take under one year to achieve, mid term goals take under a few years, and long term goals can take over five years. You should also ask yourself: what can I do today to achieve my goals? What can I do next week to achieve my goals? What can I do in a month from now, a few months, etc.
The time frame of your goals should also be flexible. As the current COVID-19 outbreak continues to progress and impact the market, your deadlines should be adjustable as your current financial situation may change. Your deadlines could be pushed back days, weeks, months, even years, so it is important that your time frame is adjustable depending on the current market situation.
3. Write down your goals
Once you have your SMART goals established, you will need to write them down and track them. You can use a calendar, spreadsheet, notepad, mobile app, or this helpful worksheet. Check in periodically, adjust where necessary, track your progress, and celebrate when you have achieved your goals!
It is crucial to stay motivated and keep on top of achieving your financial goals. To stay motivated, find a support system and surround yourself with people who will help achieve your goals and keep you on track. We understand this is a difficult time financially, but we are here for you.
Contact your portfolio manager to schedule a video chat or phone call to get started on your financial goals today!