Retirement
Work backwards and buffer: How to set (and stick to) financial goals
Retirement
Work backwards and buffer: How to set (and stick to) financial goals
Working backwards is one of the most effective ways for individuals to set financial goals that actually work, according to a finance director.

Work backwards and buffer: How to set (and stick to) financial goals
Working backwards is one of the most effective ways for individuals to set financial goals that actually work, according to a finance director.

On a recent episode of The nestegg Podcast, Reventon’s Billie Christofi said that especially when planning for retirement, “we’ve got to be realistic about how much money we’re going to need”.
“If we choose to retire, we need financial freedom. What does that look like?”
Reinforcing the importance of goal-setting for planning purposes, Ms Christofi said that when setting such goals and expectations “it’s important to really work backwards. To really look at where you see yourself [in retirement].”
Acknowledging that it “sounds like a really faraway goal”, especially for young people, the finance director explained that using the technique “helps you really set up a good structure with time frames of how you are going to achieve those investments”.
“You’ll know if you’re keeping on track or if you’re falling behind,” she stated.
She said it’s especially important to consider as the life expectancy of Australians continues to increase.
But how can we plan so far ahead, when we don’t actually know what our lifespan could look like?
According to Ms Christofi, this is where the importance of a “good buffer” comes into play.
“The banks do that with their monitoring – when they’re assessing you, they’re going to put a buffer in place, just to account for increases in interest rates of if your financial situation changes.”
“We need to really do that for ourselves as well,” she explained.
It’s “making sure you’re prepared and ready” for whatever life expectations you have, whether that be family holidays or having a child.
Ms Christofi believes “it’s really important that we are prepared because everyone’s life experience is different and different life phases have different expenses”.
“We need to always be prepared for that – as long as you do have that, and you’re always putting savings as a priority, then you’ve got that buffer in place.”
From her perspective, many Australians get into the habit of spending, then saving what’s left.
“If you actually put savings first and then spend what’s left, you’ll always put yourself first,” she offered.
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