The top 7 financial goals for young families and how to set your own

financial goals for young families orange wealth

July 12, 2016 The top 7 financial goals for young families and how to set your own

Have you even seen one of those plate spinners on TV?

It’s usually someone standing there furiously spinning a series of plates as each one hangs precariously on a stick, working on such a momentum as to not all come falling down.

Well, sometimes life looks a bit like that.

We’re all so busy trying to keep afloat while dealing with everyday stuff like work, family, relationships and even household chores. It can get so hectic that we end up forgetting about the bigger picture stuff.

We can overlook our longer term objectives and how to prepare for them financially.

Sure, we’ll save money, while making sure all our financial commitments are being met.

We’ll plod along like this for years even, but at some point, it’s beneficial to stop and think: what financial future do I really want for my family and me?

That’s where setting ourselves financial goals comes in.

Setting goals isn’t a foreign concept.

Most of us at some stage have set ourselves career goals. We might’ve set (and possibly even stuck to) New Year’s resolutions.

But the reality is few of us actually have the time to sit down and pinpoint exactly what we want when it comes to our money.

It’s also easy to procrastinate.

But for all the time we delay in sitting down and taking the time to set financial goals is potentially an opportunity lost. While it can be daunting, sometimes the best thing to do is dive in.

But why should we even bother with goals?

Well, a study from researchers at Stanford and Harvard Universities revealed that setting specific goals can boost your happiness levels and the more specific the goals, the greater happiness you’ll experience.

Sitting down and thinking of buying a house or planning for your retirement in your 30s and 40s is a pretty big ask.

Realistically, financial goals are often large and long-term and subsequently, chucked in the ‘too-hard’ or “I’ve been meaning to look at that” basket. And undoubtedly, looking into setting these types of goals requires special attention and focus.

Goals are a great way to give voice to your dreams and desires. 

  1. You’ll always remember the why: having set financial goals gives you an important grounding because it can form the basis of any future financial decisions you make, as well as ensure that no matter what life throws at you, you’re able to stay on course.
  2. Setting goals provides the kick start you might just need. Ideas and intent are great but if you don’t execute on them or you wait too long, it can cost you big time from a financial perspective.
  3. Goals make you accountable: they can directly impact your behaviour. For the natural procrastinator, having a measurable, yet flexible goal that requires you to check your progress from start to completion can be extremely empowering and spur you on.

The other really important outcome of creating and tracking goals it that it forces you to sit down with your family and take the time to think about and discuss what is important to you all. For many of us, this is the first big outcome of goal setting.

 

These are the 7 most common financial goals for young families we see from our clients:

1. Upgrade my family home to gain more space and live in a great location

Where your family will live is as decided as much with the head as it is with the heart.

You might find yourselves ready for an upgrade but what do you opt for: to create your ‘dream’ home and renovate or extend or just up stakes to a new house in a spanking new suburb?

 

2. Affording my kids’ education

Nothing can evoke more heated discussion amongst parents than the debate surrounding whether to privately or publicly educate your kids.

Again, it’s all about personal preference and if you’re keen to privately educate your children, how can you go about to ensure you can afford the costly tuition and other educational fees?

And what about university?

 

3. Pay down my mortgage

Chances are you don’t want to be paying off your mortgage in your twilight years.

You want to be able to enjoy retirement without a massive lingering debt.

But how exactly can you pay off your mortgage sooner rather than later and still maintain enough cash flow to ensure your family can enjoy life day to day?

 

4. Get more organised and be smarter with money

Maybe you’re looking for a financial shake up?

A fiscal reset, perhaps?

You might be looking at how you can be smarter with your money.

Perhaps your career is on the up and up and although you’re earning a good salary, you there’s still not much leftover at the end of each month.

So, how can you save more? How can your money be made to work better for you?

 

5. Prepare for the financial challenges that will arise when starting or growing a family

Looking to add the pitter patter of little feet to your family?

Or you’re looking to take the plunge and add another baby into the mix?

It’s a decision none of us would take lightly.

There are practical considerations such as what will the financial impact of having to live off a single income (even for a while) be?

What will the maternity leave arrangements look like?

What costs are involved in getting yourselves ready for a baby?

Yep, there’s a lot to think about.

 

6. Get the jump on retirement

Chances are you and your friends of similar age are shelving any concrete retirement plans until, ahem, we’re close to retirement.

Even the most optimistic amongst realise that the future for retirees will be far less dependent on government benefits and all to do with what we do to support ourselves in our twilight years.

Where to start, though?

How much should we be saving to ensure a comfortable retirement? And how to tackle the minefield that is superannuation?

 

7. Protect my  family from the unexpected

Life can throw some major curveballs when we least expect it.

Wondering what would happen if you couldn’t work for an extended period? Facing a serious illness like MS or cancer?  

It’s these types of scenarios that may lead you to think about what financial actions you can put into place to protect you and your family from the unexpected, whilst making sure that the quality of your family’s lives isn’t compromised too much.

 

Here’s how I go about setting goals with my family

Get really clear on what is important to you and your family and prioritise

First things first, you need to sit down with your family and have an open discussion about what you’d like to achieve.

Maybe one or more of the seven most common financial goals might apply to your family. I tend to have four to six financial goals at the most as any more can become overwhelming.

This is not only good from a financial point of view, but it is a good personal opportunity to remind each other of what you value and get you on the same page. Once you have a list of goals, order them starting from #1.

I try to do this with my family at least twice a year and it always provides me a great sense of focus and motivation.

 

Write your goals down and review them frequently

The very first step towards achieving your financial goals is in the act of writing them down.

Once you commit to paper what you want to achieve, you set things in motion.

It then stands to logic that after writing your goals out, you should review them on a regular basis. It’s up to you how regularly you review your goals but typically you can do so monthly , quarterly or annually.

The main thing is to ensure you are making progress, ask yourself, “What’s the next step I need to take to move towards my goal?”

 

Choose who you share your goals with

According to American virtual mentor,  blogger and writer, Michael Hyatt, sharing your goals with everyone can be counter productive.

He writes that the act of talking about your goals becomes a substitute for actually working towards them because you would’ve gained psychological satisfaction from speaking about your goals that you’d otherwise gain from the actual accomplishment of them.

Instead, he advocates being careful with whom you share your goals with. Stick to talking about them with people who are actively helping you achieve them such as your family or an independent party like a financial planner.

 

Be SMART about it

Set SMART financial goals.

It’s an extremely useful acronym meaning: Specific, Measurable, Attainable, Relevant and Time-bound.

Here’s a personal example:

Specific: Save the deposit to upgrade my family home so we have more space and we are close to good schools

Measurable: Increase my current savings from $65k to $100k 

Actionable: Save an extra $1.5k per month

Relevant: This will be the family home for the next 20-plus years

Time-bound: 24 months

There you have it.

You’ve learnt by now that setting goals is essential can lead to a tangible increase in happiness and the quality of you and your family’s lives.

You’ve also read about what the 7 most common finance goals we see.

It’s immensely satisfying to be able to take some control over where you and your family are headed financially.

If you’ve been putting it off, there’s no reason why you can’t set aside some time – even an hour or so – either with your partner, your family or on your own to assess what’s important to you and what you want to achieve. It’s a small investment in time for something that can bring you a lifetime of rewards.

Want to chat goals with a financial adviser? Schedule a call or email me to chat about your finances (or just share stories).

 

Disclaimer: all information contained within this article is of a general nature. It does not take into consideration your personal financial circumstances. Please consult a professional financial adviser (just like us 🙂 ) when making a financial decision.

 

 

Michael Chew
michael@orangewealth.com.au

Hi, I'm Michael!I'm a Dad, writer and finance expert.My priority is making the most of what I have for my family and finding the balance between all of life's competing priorities.

5 Comments
  • Maxine
    Posted at 14:12h, 12 July Reply

    All great goals and well written. I wonder if each goal you set needs to have it’s own “use by” date and a date to review after that, like doctors do.

    They tell you to do something for a certain length of time and they would like to check on you after that date to see how you are going. So a time to re-assess/review your progress and any problems it brought up and to check if you have really accomplished the goal you set.

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