The most essential part of GoalsMapping starts with setting the right financial goals. Planning is the key to your financial success. When it comes to managing your money, planning at the very beginning of the process is critical because the goals that you choose will be the basis for the whole financial planning process. What assets you decide to invest in and the specific products you eventually buy will be determined by those goals – whether it’s how much you need for retirement or at what age you hope to retire at.
The GoalsMapping process aims to align your savings and cash flow with the goals you want to achieve. It will involve all the steps of the financial planning process. You will need to have a clear vision of what your goals are, manage your cash flow effectively, take advantage of the compounding effect of interest, find the right balance of risk and returns, and have adequate insurance coverage so your plans are not derailed by an emergency.
It is important to understand that all your goals are connected, as you only have a limited amount of resources to achieve them. If you must own a big car, then you might have to settle for a smaller house, for instance. Likewise, if you plan to send your kids overseas to study, then you might have to do without a car. Hence, it is important to take the time to put together a holistic plan of your financial goals. Only then can you start the GoalsMapping process. If you have a family, it is important that you do this together with your spouse.
I have broken down the steps of the GoalsMapping process into the acronym G.O.A.L.S for easy remembrance.
G: Goals Mapping
Goals are at the heart of this process. Most importantly, you have to put a price to each of the goals that you want to achieve in life. You should start writing down the goals in chronological order, starting from the nearest one. As you write down each goal, check if it’s within your means by looking at your available financial resources.
The rule is that you have to plan your goals based on affordability and your current financial circumstances. For instance, if your financial resources are not sufficient for you to buy a landed property in the next three years, then you should either extend the timeframe to achieve this goal, reduce the amount of cash needed for it, or start saving more today at a higher interest. That said, as your income and ability to save changes, your financial goals can change accordingly too. That’s the reason why it’s important to review your goals every year.
O: Overall Resources
Everyone is different. Income potential and spending habits differ from one person to another. So this step is to calculate and identify your overall financial resources. At this stage, the most important two numbers we are interested in is your Cash Savings in the bank and the Annual Surplus you are able to save every year.
The aim of this step is to find out how much funds you can realistically allocate for the future. If you already have some existing investment assets that can be used to achieve your goals, do list them down separately. During this phase, you can also identify areas where you can cut down on your spending in order to save more money for the future.
A: Allocation Of Resources
After you have mapped out all your goals and identify your overall resources, the next step is to allocate your Cash Savings and Annual Surplus towards each goal. The idea here is to plan for all your financial goals simultaneously instead of one at a time. As you start allocating, another consideration is to look at your existing investments and decide when you would like to liquidate these investments to help reach your goals.
You will also realise that it’s much harder to achieve your goals If you take a linear approach to financial planning, as you might end up overspending on an earlier goal, and hence not be able to achieve the next one. However, with a complete picture of all your financial goals, you can allocate different amounts for each goal and place these funds in separate bank accounts, or different investment instruments.
L: Leverage Your Resources
Once you have completed the allocation, you will realise that keeping your savings in the bank will not get you very far towards achieving your goals. And if you can’t make adjustments to the time frame to achieve these goals, or cut your expenses any further, the only thing you can do is to increase the returns that you receive from your investments. This step requires you to leverage and use your savings and surplus to the maximum advantage by finding the right instruments to invest and grow your savings to the desired level within the timeframe set.
S: Strategic Testing
Coming up with a good plan is key to successfully managing your finances, but it is only a starting point. Carrying out the plan and making sure you stick to it to the end is just as critical ls. It is easy to plan, but taking action is the more challenging task. Most of us may not have the discipline to stay on track. It is very important that you regularly review your plan with your coach and consultant as your financial situation changes.
Request for your GoalsMapping Demo here!
Junwen Chen
As a coach and consultant in the financial industry, I equip my clients with empowering knowledge that enables them to make wise, informed decisions across financial aspects of life. Here are 7 simple financial concepts that will help you create more wealth in your life and coaching business immediately.
Junwen Chen
As a coach and consultant in the financial industry, I equip my clients with empowering knowledge that enables them to make wise, informed decisions across financial aspects of life. Here are 7 simple financial concepts that will help you create more wealth in your life and coaching business immediately.
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