In the realm of personal finance, goals-based financial planning is a strategy that helps shape your financial future and roadmap by aligning your short, medium, and long-term goals. Given the time of year, you may be thinking about establishing a “top to bottom” full financial tune up. By aligning one’s financial strategy with specific objectives, such as retirement, education, or homeownership, goals-based planning provides a structured framework that not only shapes financial plans but also helps align other factors of your financial life such as asset allocation, risk tolerance, and overall wealth management.
The foundation of goals-based planning lies in identifying and prioritizing personal and financial achievements and aspirations. Whether short-term, medium or long-term, these goals serve as the compass, directing individuals towards better informed decision-making. A goals-based approach prompts reflection on your wants versus your needs, allowing you to create buckets and strategies to reach all your different goals.
One of the primary advantages of goals-based planning is to create a strategic asset allocation that aligns comfortably with your goals. Rather than adopting a one-size-fits-all investment strategy, individuals can tailor their portfolios to align with their own specific goals. Goals-based planning also encourages a strong understanding of risk tolerance. Different goals may call for different risk levels and comfortability during times of volatility and investor behavior during times such as recent, with all time highs in the stock market. By utilizing goals based planning and working with a financial advisor to sift thru your priorities and portfolio, you can strike a delicate balance that aligns with both your comfort level and financial goals.
Life is dynamic, and circumstances evolve. So, it’s important to remember that as your life evolves and your priorities shift, your financial plan can be revisited and tweaked to accommodate new goals, unexpected challenges, or changes in risk tolerance. This adaptability is crucial in ensuring that the financial roadmap remains relevant and effective throughout life’s different stages.
So in conclusion, when thinking about where to get started on your financial plan, goals based planning can help you define and prioritize your objectives, shape your financial plan, optimize asset allocation, and navigate your personal financial roadmap with greater precision. If you are seeking a spring cleaning financial tune-up or are interested in learning more about how we incorporate goals-based and and top to bottom planning in our process, email info@shermanwealth.com or schedule a complimentary 30-minute call here.
