10 Tips for Developing Your 2021 Financial Plan
This month, we’ve been talking about financial goal setting and building your financial plan for 2021. I encourage you to read the other two articles before this one:
So, we’ve talked about how to set good annual financial goals. Then, we discussed how you can change your personal habits in order to allow you to actually reach your goals. Today, we are going to get into actual planning. Now that you have worthwhile financial goals and are motivated to achieve them, how do you build a proper financial action plan to get from point A to point B?
Here are some Illumination Wealth tips for creating your action plan:
1. Specify Your Financial Goals
I can’t reiterate the points in the first article enough. It is important to set meaningful, yet realistic, financial goals. These goals must motivate you and keep you focused. At the same time, they shouldn’t be so out of reach that you can never achieve them. Find that sweet spot and properly define your financial goals for the year.
2. Break Down the Goals
You will likely have some pretty big goals you are targeting. Now, it’s a good idea to break those down in to separate, smaller goals. This makes each one less daunting and helps you create more focused action steps to reach each specific financial goal.
3. Work Backward from Your Goals
This is a common trick you will hear from any successful business planner. It can be difficult to figure out how to get from point A to point B—especially those first few crucial action steps. By working in reverse, you target a specific goal and trace your steps backward until you get back to your starting point.
4. Set Milestones
In addition to the tip above, setting milestones is extremely helpful. This may also be where your smaller goals from tip #2 come in. Break down your action plan by creating specific milestones between you and your goal. As you reach each milestone, you will feel a sense of accomplishment. They can keep you motivated, and more importantly, on track toward your ultimate financials goals.
5. Set Priorities
This is another helpful tip to better define your goals and to set your milestones. Think about each of your financial goals and prioritize which are most important. Sure they are all important, but really think about which goals are vital to achieve and which ones would be nice, but maybe aren’t as crucial to your overall financial plan.
6. Think Short-Term and Long-Term
Overall, your financial plan is for your lifetime. You have long-term goals of financial independence, early retirement or passing on a healthy financial legacy to your family. Your annual goal setting and action planning efforts will be based on short-term goals and priorities. Ultimately, those short-term goals add up to get you closer to your long-term goals, so always keep both in mind when developing your financial plan.
7. Identify Resources You Will Need
As you develop your financial action plan for the year, you will want to figure out what kind of resources and tools you will need to help you achieve those goals and refine our plan. This may include hiring an accountant, tax planner, stock consultant or financial advisor. It may be acquiring software or specific financial resources along the way that will allow you to more efficiently accomplish each action step.
8. Work Step-By-Step
No action step is too small when it comes to your important financial goals. Think down to the smallest details. Make sure all your action steps will cover everything that needs to happen as you move from one step to the next toward your ultimate destination.
9. Create Deadlines
One of the best ways to hold yourself accountable to your plan is to add deadlines. Put deadline dates on each of your primary milestones, and perhaps each of your action steps, as well. This will keep you on target toward your goals as the years always go by quicker than you expect.
10. Plan to Celebrate Your Milestones
As we discussed in the previous article, celebrating the achievement of your financial milestones is a great way to stay motivated along the path to success. Build your celebrations and rewards into your action plan so you have something to push you. Let’s say one milestone is to get your personal savings up to $100,000. You know that when you achieve that, you are going to celebrate by using a little of that money to take your family on an amazing vacation. That is certainly a milestone and reward worth going after!
These are some helpful tips that will allow you to achieve your annual financial goals on your overall journey toward financial independence. For help with your financial plan, goal setting and wealth management strategy, contact Illumination Wealth today for an introductory financial consultation.