Tuesday, 22 January 2013

2013 Financial Goals

A belated Happy New Year to all of my readers.  My apologies for being absent for a significant period of time.  I spent several weeks travelling through India on holiday.  I had planned on doing a series of posts from there however discovered that it was near impossible to get a sim card as a tourist and the wireless access was terrible.

On that note I thought I would make my first topic for 2013 my financial goals for the year.  I confess that this has taken much more effort than it did last year.  It is a function of uncertainty of where I want to be a year from now.  I imagine that many people who are making big transitional moves in their lives face the same problem.  For me the uncertainties revolve around

  • My living arrangements
    • Currently I still live at home however want to move out this year.  I do not know whether I will rent or buy.  
    • Setting financial goals for the year is difficult therefore because I don't know if my focus will be saving for a large enough deposit or on economising how much I spend on actually living out of home
    • One of my goals from 2012 was to buy a sports car.  I was fully prepared to do this in January and have more than enough to do so but if I want to move out of home it may not be the most sensible move
  • Whether I can dedicate the time and effort to starting my small business
    • Regular readers may remember that last year I went through many of the preliminary steps to starting my own business
    • Life and the sheer time and effort involved however were much more than I imagined.  While it is still something I want to do if I don't want to once again trade in my life for money (as I did in investment banking)
  • Whether I start the CFA or undertake other further study
    • I am seriously considering doing the CFA at the moment.  Whilst my work would pay for all completed units so the cost is not too great, the time commitment is huge and I probably would not be able to start my business at the same time
Having said that, I have always believed that goals should be flexible and should be subject to change.  These goals are based on the assumption that my life situation does not change and so will almost certainly change over the year.

2013 Financial Goals
  • Limit my personal expenditure to $2,200 per month
    • This is an increase by 10% on my previous objective.  I did this for several reasons including
      • I still had trouble meeting $2,000 a month last year so I've given myself a little more fat this year
      • I have spent a lot of money over the last month (and predict this will continue into the current month) to update my wardrobe.  While I will expand on this later the long and short of it is that I hate shopping and so don't do it very often.  The result was that when I looked at what I was actually happy to wear outside the home there was not a lot.
  • Pay my home loan down by $3,500 per month ($42,000 over the year)
    • Because I want the greatest possible flexibility when it comes to my living arrangements (see above) I am dedicating more funds this year to to home loan relative to my stock investments.  
    • Last year it was the other way around as I felt I was very over-weight property and needed to increase my stock holdings.
  • Invest $2,000 in the stock market ($24,000 increase in stock investments over the year)
    • This should be reasonably easy to achieve.  I automatically invest $1,100 every month through my employee share investment plan and so the additional commitment is not that great
    • The challenge here is that once every six months I will be selling out of my share plan shares which then gives me a lump sum to invest at that point in time
    • I do not have sufficient exposure to Australian index funds so I do plan on increasing the amount I have invested in these over the year
2013 Non financial goals which will have a (significant financial impact)

Part of setting financial goals is working out what you want to achieve in all those other important parts of your life.  I set goals for almost all aspects of my life and some of these will have a financial impact.  Some of the ones that will have an impact for me include
  • The purchase of my sports car (or alternatively rental costs if I move out)
  • An overseas holiday to Latin America
  • A skiing holiday (potentially overseas but potentially locally as well) - I don't know how to ski which means I really shouldn't be too fussy.
As with last year the costs of these items should be covered by my annual bonus.  Unfortunately for me this bonus is paid at the end of the year and a significant portion of it is deferred compensation.

Have you set your financial goals for the year?  What are they?  How much did you think about them and do you track them?

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