Close your eyes and ask yourself this: what would you do if you had $100,000 right now?
It’s not enough to never work again, but it’s enough to help you reach a lot of financial goals, like owning and remodeling your dream house, or paying off every one of your student loans. Where would that money go?
Playing ‘what would I do with X amount of money’ can be more than just a daydream—it can be a form of financial planning.
While we’re not promising someone will hand you a pile of cash, knowing exactly what you want for your financial future is a great way to reverse engineer those goals, and to put a goal based savings and investing plan in place to make those dreams a reality.
What is Goal Based Financial Planning?
Simply put, goal based financial planning is finding a way to align your current money moves with tools to help you reach a specific goal. For new investors, this type of financial planning can be especially effective.
When you’re just starting out, investing can feel intimidating and distant.
Linking a specific goal to the investment process can make you more conscious of why you’re investing and saving year after year. Prescriptive financial advice that has no connection to your life isn’t motivating, and it won’t make you excited about the future.
Why Goal Based Investing and Saving Work
When it comes to saving money, goal based financial planning is a secret weapon.
By putting the focus on the specific things you want to achieve, you forge a connection with the acts of both saving and investing. You become emotionally invested in seeing your goals through to the end.
Traditional investment and saving plans focus on more nebulous things like your personal risk tolerance with your money.
But building a strategy based only on risk tolerance isn’t a complete picture. There’s little nuance in a plan built solely on market risk tolerance.
However, when that savings account is tied to a trip to Thailand with your best friend, or that investment account is aimed at your retirement in Myrtle Beach, you’ll feel much more excited to make contributions.
Having a goal based investing strategy also gives you a clear number to work toward. If you know the trip to Thailand is going to cost $4,000 total, and you want to fly there in 7 months, you can work backwards to reach that goal. Divide $4,000 by 7 to know you need to save $571.42 a month to hit that goal.
With a service like Twine, you can save and invest for your personal goals.
From helping you to save with your partner for that down payment, or to begin investing for retirement, Twine is designed to help you craft the financial goals that fit your life.
Financial Planning for Your Future
Investing in your future is an important part of your financial health. And it’s a misconception that it’s difficult to start investing. With services like Twine, you can get started for just $5, about the same as a Kombucha at Whole Foods.
Having future goals is the first step. Putting a plan in place to reach those goals and feeling secure that you have a solid plan?
That’s the step you want to begin with now, so your financial future is more than a daydream.