Financial Planning Strategies for Wealth Growth

July 5, 2018
Pedro Marin Ramirez

Linking Perception of Value to Financial Goals

As I mentioned in my previous blog, the perception of value for some goods and services changes proportionally with income, and it seems this also applies to your financial objectives in life. As a football fan and active player, goals seem to be the ultimate attraction when it comes down to sports, and personally, every time I train (football), my motivation is without a doubt driven by the end product = scoring goals.

The Pitfalls of Vague Goals

In the financial world, this isn’t as entertaining, particularly the ‘training / saving money’ phase. Many individuals that I work with in my profession have goals that are quite easy to understand and budget for; however, not everyone is crystal clear on the specifics. Over the years, I have found that this lack of detail is interrelated with the success rate of achieving them. To give you some context, the following scenario is the typical case I come across.

Question: Name a financial goal that you require planning and funding in the short-to-mid term?

Answer: Buy a home.

The majority would say ‘yup, that goal seems realistic if you apply yourself and have enough time,’ but all I see are the endless unknowns of the sentence, which ultimately leads to carelessness in the toughest times of all ‘the saving money process.’

Encouraging Specifics in Goal Setting

Some of the specifics I would encourage everyone to consider (for this particular goal) would be: what type of home? what day, month and year would you like to settle your home by? how much exact funding would you require? what suburb would you like to live in? how many square metres? what kind of kitchen would you like? and so on.

Now you’re asking yourself, why is this guy so interested in the specifics of a goal that is not even going to happen in the next 2-5 years if so? Well, the answer is simple ‘you need to see yourself achieving your goal with great detail in order to have a distinctive motivation.’

Basically, when you’re saving money, there will be times that you will question yourself as to why am I doing this? and the more specific your own answer is, the more drive you’ll have to keep going.

For example, you’ve had a bad day, you just went into a hell of a lot of traffic, you’re tired, and all you have for dinner is noodles and broccoli (because that’s what your budget allows you to), and then you see your savings account with enough money to go to a fancy restaurant and/or order Uber eats, that’s when you really start questioning the end product = scoring goals.

Moti-bro-ation: A Concept to Stay Inspired

How do you motivate yourself to enjoy those noodles? well, you can either a) ‘see yourself in a house in x years’ or b) ‘at 11:00 AM on the 1st of July 2019 you see yourself eating homemade pasta inside this spectacular brand new kitchen in a 3 bedroom white stylish house overlooking the city, with an amazing backyard located in your favourite suburb’ (dreaming is for free by the way).

That my friends is what I call moti-bro-ation, that bro that will always have your back and motivate you even in your darkest times because he/she seems to find the right words to inspire you (I’m sure the ‘how I met your mother’ fans are saying this is probably something Barney Stinson said – and maybe you’re right!).

Don’t let time pass by, go and get some clarity on your goals! set them with refined detail from the beginning and make sure you establish the length of them (short term 1-24 months; Medium Term 2-5 years; Long term 5-10 Years +). An extract from an article I read a week ago says ‘Your success is driven by your mindset’ and ‘Like fear, the past and the future are products of your mind. No amount of guilt can change the past, and no amount of anxiety can change the future‘ and it resonated with me! this is precisely my point, align your mindset with your goals and be clear about it.

For my next blog (based on questions received), I’ll aim to chat about how to budget for goals.

Until then,

Pedro Marin Ramirez CFP ®