How to achieve your financial goals in nine steps

Saving towards your financial goals is essential to achieving them. Follow our nine steps to help turn your future dreams into reality.

| 7 min read

We all have aspirational dreams of what we’d like to do, achieve or buy in the future.

It could be a major purchase like your first home, taking a gap year, or enjoying a once-in-a-life-time holiday. This could be in the next few years; it might be when you retire.

But all of these come at a cost. So, how do you achieve these financial goals from where you are today?

How to achieve your financial goals

1. Make a list

First, if you haven’t already, create a list of things you’d like to do, achieve or buy in your lifetime. It might seem obvious, but writing down your goals on paper can make it easier to visualise where you see your life heading over the coming years.

In fact, studies suggest that those who write down their goals have a 33% higher success rate of achieving them than those who don’t. This highlights the value of writing things down and holding yourself accountable.

2. Think about which financial goals to prioritise

Which goals are most important to you? And, how long do you have to achieve them? Splitting your goals into short (less than five years), medium (five to ten years) and long term (10 years or more) will help with prioritising.

There might be certain goals that naturally sit higher up in the pecking order than others because of age-related or financial reasons. For example, saving to buy a house might be a priority over saving for retirement for a younger person.

3. Understand the costs

This step is about researching how much you’ll need to save for each goal and assigning a cost to it. This’ll give you a specific savings target to aim for.

Things always tend to cost more than initially thought, so it’s best to overbudget. That way, you might even have some money left over that you can put towards another goal.

4. Set a budget

For this step, you’ll need to work out what your monthly income is and how much you have left after essential expenses like mortgage payments and energy bills.

We don’t recommend you put all your spare money away into savings – it’s important to still enjoy life and not feel too restricted. Around 5% to 10% of your monthly income is a good starting point.

5. Open a cash savings account

For goals that are likely to be achieved in the next five years, we recommend using a cash savings account. Because the value of investments go up and down all the time, you don’t want to run the risk of hitting a bad patch just before you need to access the money.

But make sure you shop around to find a provider that can offer you better interest rates than your high-street bank.

With Charles Stanley, you can get quick and easy access to some of the best interest rates available. It’s possible to set up an account on the Cash Savings platform with no commitment then browse, choose, and switch.

Find out more about our Cash Savings Account

6. Open an ISA

For longer-term goals, investing in the stock market offers the opportunity to grow your money faster than the rate at which prices increase (inflation). This is what’s known as earning a real return.

Holding your investments in a Stocks and Shares ISA means you don’t have to pay any tax on the income or growth generated and will also speed you along towards your goals.

You can contribute up to £20,000 a year and hold a range of investments to help build a diversified portfolio.

How does a Stocks and Shares ISA work?

7. Select your investment risk

Your risk level will be determined by how much growth you need from your investments and how comfortable you feel about how frequently the value of your savings goes up and down (called your “risk tolerance”).

Your investment time horizon is something to consider. If you have a long time until you need to reach your goal, you could afford to take on more risk by investing more in shares.

If your time horizons are shorter, you’ll want to consider taking less risk as your investments will have less time to recover from any market falls. You could achieve this by investing more in bonds which are typically seen as ‘safer’ investments.

8. Set up a direct debit

Saving regularly by direct debit is an easy and convenient way to save – it’s automatic and teaches good discipline.

One of the main benefits with this approach is drip feeding money into your investments. It helps to smooth out the ups and downs of the stock market – sometimes you’ll buy when prices are high, other times you’ll buy when they’re low. This averages out the cost you pay over time.

At Charles Stanley, you can set up Direct Debits to invest from as little as £50 per month to automatically top-up your chosen investments.

9. Review your progress

It’s important to review how your investment portfolio is performing from time to time – every six months is about right. This’ll help track your progress and make sure you’re on track to meet your goals on time.

When reviewing your portfolio, you’ll need to think about the following:

  • Are your investments and savings level still right for your circumstances and goals?
  • Are your investments performing well or not? If not, why not?
  • Does your portfolio needs rebalancing?

Get started today

If you are just starting out, you could try one of our in-house funds to provide a simple ready-made investment. Or if you’re a bit more confident but would still welcome investment ideas, our Preferred List is designed to provide a helpful shortlist of options for those considering new investments as part of a diversified portfolio.

We have a range of different investments accounts from SIPPs, to Stocks and Shares ISA, to Cash Savings accounts, so you’ll be able to find something to cater for your financial needs.

What we offer

Investing comes with no guarantees, so there’s a chance you could get back less than you invest.

The information in this article is based on our understanding of UK Legislation, Taxation and HMRC guidance, all of which are subject to change. The tax treatment of pensions depends on individual circumstances and is subject to change in future. This article is solely for information purposes and does not constitute advice or a personal recommendation.

Your home is at risk if you do not keep up the repayments on your mortgage.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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