Lady Gaga is known around the world for her music and acting career, but it took years of hard work before she got her big break. However, during that time, she already knew that she would eventually become a pop sensation.
Every day, she repeated a simple mantra to herself: “Music is my life. I’m going to make a number one record with number one hits.”
Once she set herself this intention, she made all her decisions based on whether they would help her achieve her goal. This level of focus is ultimately what allowed Lady Gaga to find the success she has today.
Goal setting could work in many different areas of your life, including your financial plan. Despite this, FTAdviser reports that 17% of UK adults have no long-term financial goals at all.
As the end of the year approaches, you might be thinking about creating some resolutions for 2025 and it could be a good idea to review existing financial goals or create some new ones.
Read on to learn how this could benefit you.
Creating personalised goals helps to direct your financial plan
Your goals are the foundation of your financial plan because they give you direction. It’s important that you understand your aims and consider your priorities so you can determine the most suitable ways to build and hold your wealth.
For instance, if you want to save for retirement, you’ll need to consider your pension contributions. You might also make regular investments to grow your wealth in the long term.
Conversely, if your main goal is to help your adult children purchase their first home, you may need to build cash savings that you can access in the short to medium term. Leaving a legacy for your loved ones might be a key goal too, so it’s important to consider the most tax-efficient ways to pass wealth to the next generation.
When you start with clear goals, you can decide on the best ways to contribute to savings and investments to help you reach those targets.
We can support you by working to understand your goals and finding the most suitable, tax-efficient ways to build and hold wealth.
Households with clear savings goals are more likely to invest for the future
Investing is an important way to build wealth for the future and achieve growth that often beats inflation. Regular investing could leave you in a more stable financial position in the future and make it easier to achieve your aims in life.
Interestingly, studies show you’re more likely to invest if you have clear goals.
Research from the University of Stirling found that households with four or more savings goals held twice as many stocks as those with no savings goals.
Additionally, having a clear target means that you’re more likely to invest in assets that are typically aligned to the level of risk that you are prepared, and have the capacity, to take.
Yet, without long-term financial goals, you could be more inclined to hold a significant portion of your wealth in cash rather than investing. This could mean that you find it more difficult to achieve inflation-beating returns, and when this happens, the spending power of your wealth will fall.
For example, Finder reports that the average UK savings account lost £2,718 in real terms between January 2014 and January 2024.
In comparison, Investopedia reports that the annual average return from the S&P 500 – adjusted for inflation – since the index started in 1957 was 6.37%.
While past performance doesn’t guarantee future returns, these figures demonstrate that a goal-driven investing strategy could help you achieve meaningful growth, despite inflation.
Measuring your progress and revisiting your goals could help you stay motivated
Sticking to your financial plan may be difficult, especially if you’re saving for goals in the distant future. You may struggle to stay motivated because you don’t see the benefits of your hard work right away.
For example, you could have decades left until you retire. Yet, each month, a portion of your income goes towards pensions, savings and investments for later life, and you don’t necessarily see the benefit of that wealth now.
It could be tempting to spend those funds instead of saving them so you can enjoy more luxuries and improve your quality of life in the short term. However, this might mean you have less in your retirement pot and have to make sacrifices to your lifestyle later.
Measuring your progress towards your goals could be useful here as it allows you to see the benefits of your hard work as you move closer towards your target. Additionally, revisiting your goals can put your plan into perspective and remind you of the bigger picture you’re trying to achieve.
Once you recognise that you need to save now if you want to enjoy more time with family or travel the world in retirement, it might be easier to resist the urge to overspend in the short term.
Get in touch
If you plan to revisit existing goals or create new ones for 2025, we can help you to achieve them.
Email hello@fcadvice.co.uk or call 0333 241 9900.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.
