Retirement Income

Wed, 5 Jun, 2019Joanita Wibowo

Why you should reframe your financial goals

Why you should reframe your financial goals

Ever heard the mantra that we need $1 million or more for a comfortable retirement? This is one of the many popular financial goals that revolve around specific numbers – for example, saving $30,000 for a home loan deposit or collecting $10,000 in savings in a year. Settling on a target amount to save may seem wise at first – it can give you a clear idea on what you should achieve and help you strategise on ways to get there.

However, there is more to personal finances than dumping cash to your savings account.

Focusing on numbers may not be the best way to frame your goals. As the personal finance website The Financial Diet said, “Accumulating money for the sake of a number misses the point entirely – life should be treated as a story you are writing, and money should be the ink that helps you write, not the story itself.”

In other words, it can be more helpful to focus on what you want to do with your money rather than how much money you have to earn.

A focus on numbers revolve around what you should do – and thus may seem intimidating and unattainable – but paying attention to the potential results helps shift your perspective to what you can do and gives you more fuel to work towards your goal.

Making your goals about experiences instead of numbers can help you become more flexible and inspire ideas to achieve your desired ends with less spending. For example, trying to put aside $25,000 to buy a new car is different to keeping in mind that you want to find and get a nice, affordable car.

Setting the goal of “touring Europe” instead of “saving up $8,000 to travel around Europe” may also prompt you to get creative and think up of faster, more affordable ways to get to the other side of the world without being tied down to a certain amount.