In this final article of our series on questions to ask your financial planner during an annual review meeting, we will be looking at the whys and hows of goal-based financial planning. This personalized approach helps you organize your finances around what truly matters to you.
Whether it’s buying a home, saving for a child’s education, financing a passion project, or retiring comfortably, goal-based planning puts your objectives at the center of every decision. This shifts the focus from just filling your bank account to saving for your unique financial aims.
What Is Goal-Based Financial Planning?
Goal-based financial planning is a financial strategy that revolves around your individual life goals and financial milestones. Rather than focusing solely on the money in your accounts or how the stock market is performing, this approach prioritizes reaching clear-cut targets you’ve set.
It involves identifying specific objectives, assigning timeframes and dollar amounts to them, and creating a flexible, personalized plan to reach them. For example, if you are looking to purchase a home, you would:
- set that as your goal,
- determine how much you would like to spend on the house,
- add in other buying costs such as home loan insurance and hiring a home inspector,
- consider what a good down payment would be,
- identify a time frame for saving the down payment, and
- choose your saving method.
The Power of Personalization
At Iron Point Financial, we understand that no two lives are the same and your financial plan doesn’t have to be either. Goal-based financial planning allows you to tailor your financial strategy to your unique lifestyle, values, and dreams.
One of our core values is the wise stewardship of funds. We believe that everyone is given a unique measure of resources, and we must choose how we use what we have been entrusted with. The inherent personalization of goal-based financial planning helps you do exactly that, by taking you beyond basic saving and helping you figure out how to steward your assets to the best of your ability.
You likely have particular financial goals you’d like to reach. Those may be focused on improving your living situation by owning a home or safeguarding your family legacy by sending your kids to college.
Perhaps your goals are more philanthropic, like starting an animal rescue, or setting up a foundation to assist people struggling with a specific situation or disability. Either way, goal-based financial planning could help you take your first steps toward those goals.
Flexibility to Adapt as Life Changes
We all know that life can be unpredictable. A goal-based plan gives you the flexibility to adjust as circumstances evolve. You may end up with an unexpected job change, a “later in life” baby, or a dramatic shift in your goals due to a health situation.
Whatever the reason, goal-based financial planning can adjust with you as your needs change. If you do find the need to switch things up, meeting with a certified financial planner (CFP®) could make the process less intimidating. They have the financial experience, training and skills to walk with you through a variety of financial challenges.
Aligning Investments with Your Goals
In goal-based financial planning, your investment strategy is aligned with the timeline and purpose of each goal. You are able to work towards both short and long-term goals at the same time, but use different investment strategies for each.
We believe it is important to develop plans that allow you to increase or decrease your risk tolerance based on the goal you are focusing on. Traditionally, a long-term goal, like retirement, would allow for more risk than a short-term goal, such as paying off your car. This alignment helps balance risk and return in a way that supports your personal timeline.
Start with Specific and Realistic Goals
To build an effective plan, you first need to get clear on what you want to pursue by being as specific and realistic as possible. Being specific allows you to concentrate on concrete, attainable goals versus ambiguous, ‘that would be nice’ objectives.
Here’s a practical example: instead of simply having a vague goal of “saving for traveling”, you could choose a specific dollar amount to set aside each year for travel. The amount would be based on:
- where you would like to travel,
- how much it would cost to travel there, and
- how long would it take you to save to travel there.
This process can also be a great way to teach your children how to save. You could:
- allow them to have some choice in setting a short-term goal,
- invite them to give from their pocket money to help reach the amount needed, and
- host a special celebration when you hit the mark.
Take The First Step: Reach Out Today
If you know where you want to go, but aren’t quite sure which financial steps you should take to reach your destination, why not contact us so we can meet with you and discuss your goals?
We can help you assess and reassess your priorities, update strategies, and adjust investments as needed, all in the name of placing goal-based markers on a financial roadmap that can serve you for the long-term.
If that sounds like something you would be interested in, why not schedule an appointment today to meet with an Iron Point Financial CFP®? We’re ready to discuss your finances and values, and to start defining your goals together including looking at strategic next steps to take toward those financial goals. What’s stopping you?
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Iron Point Financial is here to empower you to secure a brighter tomorrow. We operate physical offices in Grove City, PA and Greenville, PA.
We primarily serve residents of Pennsylvania, Ohio, West Virginia and Florida but we also have security registrations for 22 other states across the continental USA.
Further Reading
Disclosures
General Disclosures
- All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
529 Plan Disclosures
- Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing.
- This information is found in the issuer’s official statement and should be read carefully before investing.
- Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan.
- Any state-based benefit should be one of many appropriately weighted factors in making an investment decision.
- The investor should consult their financial or tax advisor before investment in any state’s 529 plan.
