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Setting Your Personal Financial Benchmark

When you set a goal for yourself, whether financial, fitness or in another area of your life that you’d like to improve, how do you track your progress? Do you measure your successes against standards that were set for or by someone else? Or do you measure your success and achievements based on where you started out and where you’re trying to go?

Whether financial or fitness-related, paying attention to national trends and news is an important way to stay educated in a general sense, but setting your own personal benchmarks is often more important in terms of working toward your specific goals.

It doesn’t matter if your investment account beat the S&P 500 by 2 percent last year, unless that gets you to your ultimate goal for that bucket of money, such as sending your kids to college, retirement planning, going on a dream vacation, saving for a rainy day, etc. The key is to remember that each of your accounts is designed to help you achieve a financial goal, not to meet a certain return threshold.

When it comes to personal goals, working with a professional who can get to know you and your situation can go much farther than trying to keep up with a metric that doesn’t apply to you. If you’re trying to get in shape and lose weight, you probably aren’t going to adopt the lifestyle and workout routine of a professional athlete. But you might join a gym and work with a fitness expert who will assess your needs and current health situation.

Hiring a financial planner is a lot like hiring a personal trainer. We all want to be in shape. Why? Because we look better, feel better, and it helps build confidence. The trainer knows what your body is capable of, knows your starting point and fitness aspirations, and helps you get from point A to point B by creating a workout schedule. The same goes for a financial planner. A good advisor gets to know your particular financial situation and goals, and then crafts a plan to help you get there. But as anyone who’s tried to get in shape and lose weight knows, creating the plan is the easy part. The biggest benefit of a personal trainer is that you have someone to hold you accountable to your plan and goals. They don’t let you drop the ball or make a bad decision when presented with the chance. Your trainer keeps you focused on the long-term prize.

We’ve all heard the statistics about New Year’s resolutions, right? A quarter of Americans give up after less than a week, and half have abandoned their resolutions by April 1. But those who actually take the step of hiring a personal trainer or fitness consultant are far more likely to stick with those resolutions throughout the year and beyond. This same principle of accountability applies to your financial life. Those who work with an advisor, on average, tend to out-perform their individually investing peers.

So take a few minutes to ask yourself, are you on track for the goals – financial or fitness – that you have set for yourself? Do you think that you are, or do you know that you are? And what benchmarks are you measuring by? Whatever your progress toward your financial goals, our team can help keep you on the path toward achieving them. So go ahead – give us a call.

Article by David Smyth, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.

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