Financial Planning

Setting strong financial goals: a short guide

By August 24, 2020 No Comments

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.

For many people in 2020 life has felt very out of control. Bringing clarity and a sense of order to your wealth and finances, therefore, is a great way to bring stability and peace of mind to your situation. Here at Elmfield, our financial advisers in Padiham, Burnley, Lancashire offer some thoughts on how to set strong financial goals which move you in a positive direction. We hope you find this content useful. If you’d like to speak to an independent financial adviser about your protection plan you can reach us via:

T: 01282 772938



Dream, then come to earth

Life isn’t all about money – rather, money helps get you to where you want to go. Perhaps you imagine a dream retirement from the age of 55, where you can spend your remaining years travelling and pursuing creative projects. These kinds of goals are noble and require a financial plan to sustain your lifestyle and protect you from unforeseen circumstances.

Here, it can be helpful to stop and think about what you would love to achieve in the future – if there were no financial restrictions. Write your ideas down. Then, start to consider how realistic each of them are. You may not be able to retire on a £100,000 indefinite annual income, for instance, but perhaps you could pay off the house early and achieve £30,000 per year? 

Here, it can be immensely helpful to discuss your options with a financial adviser. This person can bring clarity to your goals. Quite often here at Elmfield in Padiham, Burnley, Lancashire, this process results in helping clients see that a goal they thought was unrealistic is, in fact, certainly possible! Sometimes, we need to help people “come down to earth a bit” with some of their goals. Yet it is better to hear the truth now than be shocked by an unpleasant realisation later.


Be targeted and clear

Many people have vague dreams about “retiring comfortably one day” or “achieving financial independence”. This is fine up to a point, but it is much more helpful to be specific with your goals so that you can measure your project towards them as you implement your financial plan. One useful way of doing this is to use SMART goals – which stands for specific, measurable, achievable, relevant and time-bound


Include the short and long term

So far we have mentioned longer-term financial goals such as retirement. These are important, yet it’s also crucial to have some short-term goals too, as achieving these can bring a great feeling of reward and that your plan is progressing. These might include saving for a deposit on a house, paying for a wedding or renovating a home. 


Get wise with your plan

Your goals need to inspire and resonate deeply with you. After all, you’ll likely be going after them with your financial plan for many years. Yet it’s also crucial to ensure these goals are grounded in smart decisions about maximising returns and minimising risks and costs. 

One common aspect of financial planning which many people overlook is inflation, which can steadily erode the value of your savings and investments over the years. At present in 2020, the rate of inflation currently sits at about 1.19% yet it reached over 7% in the 1990s. Since rising inflation can erode the buying power of your cash savings and investments, it’s important to plan with your financial adviser about how to keep growing the real value of your wealth.

Another area that could affect your course towards your financial goals is risk protection. For example, you may have a goal to pay off the house in the next 15 years. Yet what happens to that goal if you suddenly have a serious illness or accident, and can no longer continue in paid work? Here, a financial adviser can help you craft a robust contingency plan to help ensure you keep moving forwards. This might include critical illness cover or a life insurance plan.

Finally, it’s also important to take stock of your financial goals in light of relevant tax rules and allowances. This can be a complex area of financial planning yet it can make all the difference in the world to your goals. 

Consider, for instance, some of the tax rules surrounding pensions in 2020-21. Suppose you have two main goals: to retire with a £300,000 pension pot and to pass whatever is left to your children when you die. Navigating the current tax rules could help you optimise your success towards these goals. For instance, your contributions towards your workplace pension receive tax relief at your highest rate of income tax (e.g. a Higher Rate taxpayer would “pay” 60p for each £1 saved into their pension). Rather than focusing on increasing your cash savings for retirement, therefore, you might instead consider increasing your pension contributions – since this is likely to lead to a larger nest egg at the end. Moreover, defined contribution pensions can also be passed to beneficiaries in 2020-21 without being subject to inheritance tax, so this may also help you achive your second goal.


Conclusion & invitation

If you are interested in starting a conversation about your financial plan then we’d love to hear from you. Get in touch to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire. 

Reach us via: 

T: 01282 772938