Why life goals are crucial when plotting your financial plan

April 15, 2025

When it comes to financial success, your life goals matter more than how much money you have.

That may sound contradictory, yet focusing solely on accumulating wealth without giving some serious consideration to your long-term goals may not serve you as well as you might think.

In fact, setting long-term financial goals could:

  • Help you become more mindful about how you spend your money. Without a goal, you could easily let your money trickle away by spending without much thought. In turn, this may mean you succumb to the costly problem of lifestyle creep. If you allow your spending to increase alongside your earning power, you may miss out on maximising savings and investments to meet your future goals.
  • Provide a sense of direction and purpose. Without goals, it’s easy to fall into the trap of living payslip to payslip or making impulsive purchases that derail your progress.
  • Help you stay focused. Goal-setting helps you prioritise your financial decisions and allocate resources effectively. It allows you to distinguish between needs and wants, ensuring that you focus on what truly matters.

Setting and working towards meaningful financial goals could help you to stay calm when markets are anything but

It can be hard to maintain your focus when markets are volatile. Without a firm goal in mind, you could easily find yourself knocked off course.

The recent market reaction to Trump’s tariffs is a great example of this.

In such cases, we see the results of investors reacting to uncertainty. Meanwhile, the media thrives on amplifying short-term concerns.

Without firm financial goals you’re more likely to succumb to the fear and react. Instead, you may be better placed to take a step back, disregard the scaremonger headlines, and keep your focus on the long term.

Start by thinking about what will bring you joy

While it’s sensible to plan for things like reducing your debts and being able to pay for later-life care, it’s also important to include some more colourful goals that make you happy when you think of achieving them.

So, think about what will bring you joy.

Do you value time with family above all else? Perhaps you want to start a business one day or travel the world?

When you consider your priorities and passions, you can create a clear vision of what you want to achieve. And, with a better understanding your hopes and dreams, you can turn your attention to the financial milestones you need to aim for.

3 top tips for setting your financial goals

1. Be specific

If your financial goals are a vague notion, you’re less likely to reach your goal – and more likely to be swayed by external events.

Instead of saying: “I want a comfortable retirement”, say: “When I retire, I want to travel to all the places I haven’t yet been before settling down close to my children and grandchildren”.

While you may not specify exactly where you’ll want to travel 10 years before you retire, you can plan for extensive travel over the course of a set period and work out how much money you’ll need move close to your family when you tire of exploring.

2. Set a deadline

Humans are fallible and it can be way too easy to put off your goals if they aren’t time-sensitive.

To help you stay focused and avoid prevarication, give yourself a deadline. Ideally, you should aim to make it achievable, while also a little challenging.

It may help to divide and conquer by splitting your goals into short-, medium-, and long-term aims.

Short- and medium-term goals might include:

  • Saving up an emergency fund
  • Saving for a holiday
  • Paying for a new kitchen or bathroom
  • Saving for a house deposit.

Typically, short-term goals should be things you want to tackle in the next five years.

Long-term financial goals could be:

  • Starting a business
  • Saving for retirement
  • Paying for your children’s education
  • Travelling for several months at a time.

Think of long-term goals as ones that you want to achieve in five years or more.

3. Write it down

Putting pen to paper and writing down your financial goals could help you achieve them.

There are studies that back this up.

Indeed, a psychology professor at the Dominican University in California conducted a study on goal setting, and found that:

  • Participants who wrote down their goals and dreams regularly achieved them at a significantly higher level than those who didn’t.
  • By writing down their aspirations, participants were 42% more likely to realise their dreams.

What are you waiting for?

Grab some paper and a pen and write down your financial goals.

Then, pin the paper somewhere you’ll regularly see it – frame your list of goals and hang them in your bathroom, make them your computer wallpaper, or use your favourite magnet to attach the list your fridge.

Ultimately, putting your goals where you will see them regularly will help to keep you on track and motivated to succeed.

The route to financial independence starts with a goals-based plan

When you know what you want out of life, you can use this understanding as a starting point for creating a financial plan that will help you achieve your goals.

Rather than falling into the trap of endlessly building wealth without ever getting to enjoy yourself, you can join the ranks of those who are taking proactive steps to be happy now and in the future.

Your financial planner will help you build a detailed picture of your circumstances, including your income, outgoings and assets as well as your aspirations for the future and a definition of what financial freedom means to you.

We’ll then use cashflow planning software to give you a clear route forward, and stress-test your plan for when life throws you a curveball (which it inevitably will).

Your financial plan starts with a conversation about what matters most to you

As lifestyle financial planners, the first conversation we have with every new client revolves around what matters to you, what drives you, and what lifestyle you want to be enjoying in the future.

This way, we can work with you to ensure that the money you earn and save actually improves your life.

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