What goals? And how do I get there? | Financial BALC #69
Quick… What are your top three financial goals? No, you can’t answer generically, like “financial security”. If we’re being honest, most of us haven’t thought much about financial objectives. We muddle through, spending to meet the day-to-day expenses that dominate our attention. The basics, or core, of this subject is to identify the financial goals that matter most to you and to make sure they happen.
You have not been assigned an easy task. Sometimes financial priorities can change from day to day: paying for a child’s braces moves to saving for a college fund which takes from putting money towards retirement, and on and on. But to get what you want, 1) you must decide which goals will take priority and 2) work toward the lesser goals only after the big ones have been achieved.
Fortunately, you have two things on your side: time and the power of compounding. But to take advantage of the compounding magic (and time), you need to start young and you need to decide early which of the many possible financial goals are worth pursuing. Oh, and you need to start. Thinking, planning and making decisions are fine, but useless if you don’t execute.
Task #1: Make a list of all the things you need to feel secure, happy or fulfilled. For example, create an emergency fund, get out of debt, buy a house, send kids to college, take care of an aging parent, etc.
Task #2: Determine which goals take priority. Ask yourself some clarifying questions… Is someone’s health involved? How many people will be affected by my decisions? Will the choice make my life better? My children’s lives better? How will I live after I retire?
Understandably, you need to set aside part of your income for current pleasures, so long as you have enough cash left over to put toward your long-range goals. Remember, too, that your priorities will change over the years. Reexamine and rank your priorities regularly to use your money most effectively. If you create a habit of rating the urgency of every big purchase against your primary financial goals, you’ll find that your spending – and saving – is under control.
