Five habits that will set you up for financial success

The new year is the perfect time to think anew about your finances. Even the smallest tweaks can really make a difference to the overall outcome. Let’s take a look at five positive habits that can put you in good stead for year ahead, and beyond.

1. Make sure your financial goals are really clear

Everyone has aims for what they want to do in life.

Some might be relatively straightforward, such as funding your child’s education. Then there are others that are much more complex or potentially daunting – for example, leaving your job to set up your own business.

Goals can often change too – perhaps over the holidays, you’ve had the time and space to think about the bigger picture. Perhaps you’ve been inspired to pursue something you never thought possible until now.

Whatever your financial goals, the critical habit that will help set you up for success is visualisation. You need to clearly picture what achieving this goal looks like.

• What are your specific aims?
• What’s your timescale for reaching your goal?
• Are there clear steps for how you’re going to get there?

Regularly updating your goals, and discussing them with your Financial Planner, will also help to bring them to life.

2. Resist the temptation to obsess over the markets

The second critical habit is being able to take a long-term perspective. This is a theme we come back to frequently when we speak to clients.

Growing wealth takes years, or even decades. Planning out your finances needs to have a similar timeframe. Try to ignore short-term distractions such as temporary blips in the market, or busy periods of news, and don’t let them have too much influence on your investment decisions.

A good start to this is trying to ignore how much your pension fund, financial index, or particular stock moves up or down from day to day; it won’t give you an accurate reflection of what the long-term movements are. And it’s the long-term outcome that we need to focus on.

3. Be disciplined about the short term

That’s not to say the here and now isn’t important too.

In the short-term you need to be disciplined about spending. Financial freedom comes from good cash flow.

Sticking to a budget and keeping a close eye on all income and expenses is paramount. If you’re fully aware of your monthly income and outgoings this will help give you a sounder footing to exercise your long-term plans. It’s easy to lose track of where your money goes on a monthly basis, but without knowing your vital financial information you run the risk of spending more than you make or, on the flipside, not putting enough money aside to meet your savings goals.

One really helpful tool to help this habit is using cashflow modelling. We use this with clients to help them visualise their finances and plan for different scenarios. Cashflow modelling is a way of mapping out your income, expenses, and savings over time to see how your financial future could look under different conditions. With it, you can have a better idea of what’s possible, and what sacrifices might be necessary to achieve your aims.

4. Get comfortable with your own levels of risk

Growing your wealth isn’t about avoiding risks, just making sure you take educated risk.

Every investment decision you make comes with a warning that the value can go down as well as up. But, if you take no risks at all (for example, choosing to keep all your wealth in cash) then it’s much harder to get any kind of growth. In fact, over time, your money could be worth less due to the impact of inflation.

It’s important to understand your risk tolerance – the amount of loss you’re prepared to handle on an individual investment decision. This will drive your investment strategy, for example, what markets or specific assets you’re prepared to invest in.

Remember, your risk tolerance can change over time, so it’s important to review it regularly to ensure your investments remain aligned with your needs.

5. Talk about things with your Financial Planner

The previous four critical habits discussed here should help give you a sounder financial footing, but there’s another important aspect to consider – nobody should do this alone.

Managing multiple investments, pensions, or planning for retirement can be more complex than it seems. There may be other significant financial milestones that take place, such as receiving an inheritance, that add to that complexity. Or there might be big life changes, for example, marriage, divorce, starting a family, or losing a partner.

There are many occasions when we feel we either lack the necessary experience, or need a second – objective – voice to help us make our decisions.

That’s why the fifth critical habit is being able to talk through your options with someone you trust. For many people that’s a Financial Planner. You want someone who listens, with the right experience and qualifications who can treat you like a human being, not a number.

How do you know who’s right for you? There’s no one style that makes a ‘good’ planner. But ultimately, the right Financial Planner is someone who understands your financial goals, communicates clearly, and helps you feel empowered to make confident decisions about your future.

Watch our Financial Planner Kelly Shek talk more about how to select the right Financial Planner below.

And if you’d like to chat to us about your financial goals for 2025, please get in touch.