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Did you achieve your financial goals in 2017? If you found yourself short on cash flow last year or didn’t reach the savings milestones that you hoped for then it may be time to set some new financial goals for the New Year.

Here are four ways to help set financial goals for 2018:

Prioritize for the short and long term.

Many people have short-term (within 2 years) and long-term (over 5 years) goals; the key to achieving all of them is to prioritize. The amount of money, time, and effort you dedicate to each goal depends on their importance a.k.a. their priority.

According to Investopedia “Setting goals is an important step toward becoming financially secure. If you aren’t working toward anything specific, you’re likely to spend more than you should. Setting short-term financial goals can give you the confidence boost and foundational knowledge you need to achieve larger goals that will take more time.”

Be realistic about all goals.

Setting, working toward, and achieving financial goals is a strong motivator for bigger accomplishments, but only if the goals are realistic. It can be extremely disappointing to want something that you don’t achieve.

When setting financial goals, be realistic about the time horizon, monthly budget allocation and affordability. It’s also important to set mini-goals and check in on your progress regularly. These actions will help determine if you’re on track to achieving your goal or if the plan of action needs to be adjusted.

Seek professional advice.

When it comes to your personal finances, goals are not always easy to achieve – that’s where the advice of a professional can become part of the plan. A financial advisor can help set realistic money management goals as well as create a plan to help you achieve them in a reasonable amount of time.

An advisor can also help create investment strategies for your financial goals that align with your risk tolerance and time horizon. According to Marketwatch “Median annual returns for 401(k) holders who got professional help were 3.32 percentage points higher than returns for people who invested on their own.”

Don’t just save. Invest wisely.

A major benefit of seeking professional financial advice is the advisor’s investment knowledge and industry expertise. Of course, the option to invest on your own is an option, but when it comes to money, paying for service from an expert is definitely worth the cost.

A financial advisor doesn’t just help you find extra disposable income to save; they help you invest wisely so your money grows over time. The more your money grows, the faster you’ll achieve your goals.

If you have specific financial goals for 2018, contact me today and let’s create a plan to achieve them!

 

Brian Littlejohn is the Founder and CEO of Sherwood Investment Management, a fee-only financial advisor firm in Sonoma County, California. Brian is a CERTIFIED FINANCIAL PLANNER(TM) professional who specializes in investment management. He holds a MBA and a Master’s Degree in Financial Analysis. He has over a decade of experience helping clients achieve their financial goals and occasionally teaches investing and financial planning courses as an adjunct professor.

The New Year is often a time when people evaluate their lives to see if they’re where they want to be with their careers, with their health, and with their money. As you receive your end of the year account statements, now is the time to book an appointment with your financial advisor, revisit your investment strategy, set new goals, and check in on your retirement plan.

Are you still comfortable with the investment strategy?

This is the first question to ask yourself (and your financial advisor) when planning for retirement. Are you comfortable with the level of risk you’re taking in your retirement portfolio? The general rule of thumb is the longer your time horizon, the more investment risk you can afford to take. However, there is always an exception to every rule.

Although past performance is not an indication of potential future returns, looking at how your portfolio fluctuated over the past year can usually help determine if you’re comfortable with the level of risk being taken. I say “usually” because last year was somewhat of an anomaly in terms of the amount of risk or volatility that the U.S. stock market exhibited. Volatility will no doubt return to our markets; it’s just a matter of when.

Can you afford to increase contributions?

When it comes to saving for retirement, the more you can save, the merrier. The New Year is a perfect time to revisit your budget and determine if you can afford to increase the amount you contribute to your retirement accounts.

Increasing your contributions may allow you to retire earlier than planned. It might also allow you to spend at a higher level during retirement. Think two yearly trips to Hawaii instead of one.  Use this Vanguard retirement calculator to see how long your nest egg will last and how much your investments could grow over the years.

Are you on track for a set retirement date?

Setting a target date is a big part of checking in on your retirement plan. The question to ask your financial advisor is will your current and future savings allow you to retire on the date you hope for with the income you desire. If the answer is no, then your goals may need to be adjusted – and an advisor can help.

What are the sources of retirement income?

The second major component of creating a retirement plan (after setting a realistic target date) is determining where your retirement income will come from. The truth is, not all of your income during retirement will need to come from personal savings.

There are additional sources that will bolster your retirement income such as government assistance with Social Security as well as contributions from employer savings plans. If you’re not yet contributing to a company savings plan, talk to your employer and ask if the option is available. Very often employers match employee contributions and this helps your retirement savings grow.

If retirement planning is on your list of New Year’s resolutions, contact me today to discuss if you’re on track with your retirement goals.

Brian Littlejohn is the Founder and CEO of Sherwood Investment Management, a fee-only financial advisor firm in Sonoma County, California. Brian is a CERTIFIED FINANCIAL PLANNER(TM) professional who specializes in investment management. He holds a MBA and a Master’s Degree in Financial Analysis. He has over a decade of experience helping clients achieve their financial goals and occasionally teaches investing and financial planning courses as an adjunct professor.