You’ve heard all the advice about setting goals for your finances, but you’re left with one nagging question: Which goal gets top priority? It shouldn’t be so difficult to make financial plans! 

Take a deep breath. Every financial goal is a priority, but they don’t all have the highest priority simultaneously. It’s a matter of knowing how to make the right decisions. Let’s explore the basics of goals-based financial planning so you can create a plan that works for you and your family.

What Is Goals-Based Financial Planning?

Goals-based financial planning gives you a better approach to achieve balance among your many goals, allowing you to fund each one in proper measure. It begins by acknowledging that a template won’t cut it. Investors who attempt a do-it-yourself approach to financial planning often focus on saving up to achieve a single goal, such as saving enough money for retirement. Then, they try to carve out what they need to fund everything else and hope for the best.

That’s the wrong approach. In a report published in the Journal of Financial Planning, David Blanchett, CFP®, CFA suggested that “using a goals-based framework to determine which goals to fund and how to fund them can lead to an increase in utility-adjusted wealth of 15.09% for a hypothetical household versus a naïve strategy focused only on funding retirement.” 

In other words, goals-based planning is a better approach. It embraces a far more strategic approach that takes into account all of your goals and obligations. That way, you are more likely to achieve everything that’s important to you, instead of just one end-all, be-all objective you may or may not ever reach.

How does goals-based planning achieve this? It replaces one-size-fits-all tactics with a highly personalized and tailored wealth plan. With Cogent, that approach is determined by each family’s Cogent Course of Action. This plan can usually be conveniently organized into three broad categories for planning purposes. These are essential goals or your needs, important goals that are wants, and gratitude and giving goals that are your wishes.

Essential Financial Goals: Rock-Solid Reserves

As the name implies, these goals absolutely need to be funded, no matter what. Think food, clothing, shelter and healthcare—the necessities. You need money for all of these. But you’ll also want to have rock-solid reserves to fortify these essentials against life’s many uncertainties. 

To guard against the unexpected, you need to take several steps:  

  1. Create a household budget to responsibly fund a satisfying lifestyle.
  2. Get insurance for your property, health, and long-term care. 
  3. Work with an attorney to set up legal protections, such as a will, a power of attorney, and an advance directive (especially if dependents are involved).
  4. Build an emergency fund that will allow you to stay on track when (not if) you get hit with unexpected expenses that could derail your financial goals.

Think of these as the foundation to your financial success. With these in place, you can work toward the future of your dreams.

Important Financial Goals: The Finer Things in Life

Most of us want to achieve far more than simply living, eating, and breathing. We all have important personal financial goals – the things you want in life. These can vary in both number and kind depending on your tastes and temperament. They may include: giving your children a good college education; funding a start-up business or ideal career; taking a sabbatical; traveling and savoring the finer things in life; enjoying bigger homes; driving better cars; and pursuing exciting experiences with the ones you love.

Here’s where goals-based planning and investment management become particularly crucial. The more effectively you invest, the more likely you’ll be able to achieve these important goals. Effective doesn’t mean “playing the market.” Rather, being effective means harnessing the returns the markets deliver in a way that reflects your unique willingness, ability, and need to take on great financial risk.

In other words: What balance do you want to strike between safeguarding the lifestyle you’ve already achieved and taking on additional risks to pursue greater wealth?

As a goals-based planner, we at Cogent help you answer answer this question, and then we utilize prudent, evidence-based investing to build and preserve the assets to achieve the important goals you’ve set.

Gratitude and Giving Financial Goals: Funding Your Biggest Wishes

For most people, living your best life includes creating a positive legacy during your lifetime and beyond. Setting and reaching goals for your family, community, and philanthropic pursuits calls for finely tuned financial logistics. It means additional investment management, tax planning, retirement planning, estate planning, and more. You need to identify your legacy goals and prepare your heirs for their future as well.

Goals-based financial planning is a comprehensive, coordinated, and organized approach to your money that helps you reach your personal goals.  In his book, “The Feel Rich Project,” author and financial planner Michael F. Kay, CFP® wrote:

“Only you can define what makes you feel rich. Only you can alter broken, destructive beliefs and replace them with healthy supportive ones. What you value most highly is your richness and success.”

Only you can define who you are and what you want out of life. Whatever those goals, the team at Cogent can not only help you articulate them, but we can also design a financial plan to help you reach them.  Call us today to schedule your Cogent Conversation. Your financial goals and dreams are too important to leave to a one-size-fits-all plan.


The opinions expressed by featured authors are their own and may not accurately reflect those of Cogent Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. © 2019, Cogent Strategic Wealth®

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