One of the most common mistakes I've seen people make when setting financial goals is that they set vague goals. For example, they might say, "I want to save money," but they don't define how much or by when.
From my experience as a financial coach, I always emphasise the importance of setting SMART goals – that's Specific, Measurable, Achievable, Relevant, and Time-bound.
Instead of "I want to save money," I guide my clients to say something like, "I want to save £5,000 for a down payment on a house within two years." Being super clear on this provides a target and helps them create a more effective plan.
Another significant pitfall is not creating an action plan.
Many people set goals but fail to break them down into actionable steps. In my coaching sessions, I work with clients to outline specific actions needed to achieve their goals.
For instance, if someone wants to save for a house, we discuss steps like setting up a dedicated savings account, automating monthly transfers, and finding ways to reduce discretionary spending. This detailed planning transforms a distant goal into a series of manageable tasks.
Lastly, failing to track progress is a big issue.
Without regular reviews, it's easy to lose focus or get discouraged. I always encourage my clients to set up regular check-ins, whether monthly or quarterly, to assess their progress.
We celebrate small milestones along the way, which keeps them motivated and allows us to adjust the plan if needed. Regular tracking and adjustments ensure they stay on track to achieve their financial goals.
Ed
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