How to build a financial roadmap
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lisad

It’s great to have ideas and thoughts about what needs to be done, but unless you plan for your financial success it and then commit, nothing will change. It’s just like those New Year’s resolutions we all make that never seem to come to fruition.

You need a financial road map that ties in with your life plan, and it needs to be written down. This will help you maintain focus and keep you accountable.

So where to start?

Start with your aspirations. What are your biggest priorities, and what needs to happen to make them achievable? Whether you want to live in a different place, provide the best education for your children, travel the world, retire a bit earlier or work fewer hours so that you can pursue your passions, bring it all together on a single page.

1. Start with a fresh piece of paper and divide it up into a table with four In the very left column down the page, list the areas you have identified as a priority. I have provided an example below.

Priority

 

 

 

Home environment

 

 

 

Contribution to community

 

 

 

Holiday and adventure

 

 

 

Health and fitness

 

 

 

 

2. Determine your current level of satisfaction with each area, out of 10, and explain why.

Priority

Current satisfaction

 

 

Home environment

6 – functional at present but ideally need another bedroom

 

 

Contribution to community

3 – would like to be volunteering at a local level at least on a monthly basis

 

 

Holiday and adventure

5 – an overseas holiday every second year rather than once in a blue moon

 

 

Health and fitness

5 – lose 9 kilograms

 

 

 

3. Record what your current roadblock is, or what needs to change in order to improve your overall satisfaction levels.

Priority

Current satisfaction

What needs to change

 

Home environment

6 – functional at present but ideally need another bedroom

Extend or move home

 

Contribution to community

3 – would like to be volunteering at a local level at least on a monthly basis

Need to have the last Friday of the month off work

 

Holiday and adventure

5 – an overseas holiday every second year rather than once in a blue moon

Additional savings to be able to afford

 

Health and fitness

5 – lose 9 kilograms

Motivation – regular exercise, improved diet

 

 

The more measurable your goals are the better, so aim to have timeframes around each of your goals. For example, when do you plan to enroll your kids at private school? Mapping your aspirations and goals out in a timeframe means will enable you to quickly review deadline or target dates.

4. If your goals involve some kind of financial impact, try to quantify it.

When you read 'financial impact' you may automatically think about specific financial goals, such as having enough money to fund an exit from the workforce, but remember, finance is an enabler to lots of areas of our life, so think outside the box a little.

For example, following on with the health and fitness goal, the financial impact would not normally spring to the top of your mind – more likely motivation and time. But what if you could hire a personal trainer to keep you accountable and provide the motivation? What about some of the programs that are available to assist?

View your money as an enabler to living the life you want – not as something in isolation – and it will have more meaning.

Priority

Current satisfaction

What needs to change

Financial Impact

Home environment

6 – functional at present but ideally need another bedroom

Extend or move home

Extension at cost of $100,000, house changeover at additional cost of $200,000

Contribution to community

3 – would like to be volunteering at a local level at least on a monthly basis

Need to have the last Friday of the month off work

Drop in gross salary of $4,000 per annum if employer will facilitate; if not, new part-time employment means a drop in annual gross income of $10,000

Holiday and adventure

5 – an overseas holiday every second year rather than once in a blue moon

Additional savings to be able to afford

Need $20,000 every second year

Health and fitness

5 – lose 9 kilograms

Motivation – regular exercise, improved diet

Personal trainer – $80 week

 

5. Remember, you can’t focus on everything at once, so start with the non-negotiables.

Start with the priorities you have identified at the top of your list and jot down all of the possible ways you could achieve your main goals. For example, if you want to contribute more to your local community, but are strapped for time, consider how you might be able to find more time, and what impact that might have on your financial management.

One possibility may be reducing your working hours or changing careers (it worked for me), but then your career may also be a high priority. Perhaps your focus needs to be more on where your time and energy are directed, and getting assistance with the things that can be outsourced.

Life is short and we can’t all be superheroes, so shift your focus to your priorities – and if that means adjusting your finances so that you can afford to back off from work, or hiring extra help, do it.

The importance of focus

You may have heard Layne Beachley’s quote “what you focus on is what you get.” Your life and money plans are exactly the same; you need to keep focusing on the end goals, especially when things seem difficult.

When it comes to managing your life goals and your finances, you also need to be able to quantify so you can measure. For example, you may need to determine your (rough) life expectancy, your expected livings costs (allowing for inflation), or the costs of your travel goals. Importantly, do you want anything left at the end? Is passing on a legacy one of your priorities? If so, this needs to be factored in. It is only through focus and setting these measurable targets that you can then work out what you need to do to get there.

Unfortunately, this stage of the process is likely to take some mathematical acumen and modelling. Thank goodness for spread sheets (or not, depending on your bent – I’m sure some of you are shuddering). This is where obtaining trusted financial advice for a financial planner can be beneficial, but by all means you can give it a go yourself.

This newsletter is published solely for information purposes. As this newsletter has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information in this newsletter, consider its appropriateness to your circumstances and if necessary seek the appropriate professional advice. Any opinions, views of contributors, conclusions or recommendations are reasonably held or made, based on the information available at the time of the newsletter. Compilation, but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this newsletter. Women in Focus is provided by Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian credit license 234945.