Jarden Wealth Weekly: How to build wealth intentionally with four key tips

OPINION

Anyone who knows me will have likely heard me say that “wealth doesn’t happen by accident”.

What I mean is, wealth creation is the result of choices and decisions we make, as well as
those we don’t. The results of these actions can be positive or negative throughout our lives.

What really matters is not the consequence of each decision, but the net effect years down the track – have they enabled you to achieve your goal?

Before you set a wealth creation goal, you first need to consider the answer to this question: What is wealth?

The answer is different for each of us and it depends on what having wealth means for how we want to live our lives. However, what is the same for most of us is that the journey to create wealth happens over a long period of time, normally years, and often over decades.

This might sound cliché, but the first step to get started in building wealth is to set some goals. Here are some tips to help you on this journey.

Be SMART

To be effective, goals need to be more than ideas. They need to be specific to help you take steps in the right direction towards achieving whatever the goal might be.

A great acronym to help you set goals is SMART.

Your goals should be: Specific, measurable, attainable, realistic and time-bound.

Whether your end goal is focused on how you can retire by a certain age or on how you can maintain your standard of living to achieve the lifestyle you desire, having a clear end goal can help you with decision making along the way.

When you are unsure about your next step, think back to your goal and ask yourself, “does making this choice help me achieve my goal?”

You may not always get every decision right, but asking this question will help maintain clarity regarding your longer-term end result and the best steps you can take as you go.

Identify the little and big steps

With your wealth-building goal likely spanning decades before it can be achieved, it can be helpful to break your goal down into little and big steps.

A little step towards your goal might be setting up a regular automatic payment into your savings account. A big step might be implementing an investment plan, for example.

What stage are you at in your life now and what do you need to focus on first to get started? What is the gap between where you are now and where you want to be?

The questions you ask yourself will help identify these big and little steps you can take to move forward in the business of creating your financial future.

You’ll likely find that your investment goals will feel more achievable when you have identified the steps you need to take to achieve them.

Goals are individual, investments personalised

It’s important to remember that just as your goals are unique to you, your investments should be bespoke for you too.

Don’t be tempted to copy your friend or neighbour because they have shared what has worked well for them.

As individuals there are so many variables such as your risk tolerance and investment timeframe that help to determine what is the right investment strategy.

These need to be taken into consideration for the individual as part of creating an investment plan.

What is suitable for one person may not be suitable for another, so a good idea is to work with a financial adviser to design an investment portfolio that works for you.

Be adaptable

Life can throw some curveballs at us and a good investment plan should be flexible. If you get off track or for any reason your goals change, you may need to be prepared to try something new.

It would be great if the journey to creating wealth was linear, but the reality is you will likely experience ups and downs along the way.

Having a financial adviser that you trust and can talk to is a great asset when these unexpected curveballs arrive as they can help you make any necessary changes all with an eye on your end goal.

While it can be a ride, creating wealth can be exciting and there is a lot of satisfaction when you achieve your goals.

Having a goal is not just the first step, but a key enabler in giving you the focus to work towards what you want.

Although you might have a specific dollar figure in mind as part of your goal, it’s more important to remember why you set that goal in the first place and what achieving it means to you and how it makes you feel.

Whether it be to give you peace of mind that you can travel more frequently to see your grandchildren overseas, or a sense of security that you can retire comfortably, everyone’s motivators are personal to them. What’s yours?

Sarah Ashby is a Wealth Management Adviser at Jarden in Tauranga.

Jarden Securities Ltd is an NZX firm. A financial advice disclosure statement is available free of charge at jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/

Full disclaimer: jarden.co.nz/wealth-sales-and-research-disclaimer