Set financial goals
As with anything in life, without tangible financial goals, and specific tactics for achieving them, we can drift along through a lifetime of work and end up a financial failure. It’s trite but true:
People don’t plan to fail; they just fail to plan
Not everyone shares the same financial goals. Your specific goals will depend on a number of factors—your values, age, financial situation, tolerance for risk, and interests. So, it’s important to identify each of your financial goals and dreams and write them down. Then organize your goals by timeline.
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Prioritize your goals
Short-term goals are the easiest to visualize and the easiest to attain. Attaining longer term goals, though, usually requires the installment plan — making periodic investments* over a long period of time. Unless you establish the habit of setting aside at least a small portion of each paycheck for long-term investment, you’ll likely just continuously fund a series of short-term goals. To achieve those serious long-term goals it takes three ingredients:
*Periodic investing by dollar cost averaging does not assure a profit and does not protect against loss in declining markets. Since such a plan involved continuous investment in securities regardless of fluctuating price levels of such securities, the investor should consider his or her financial ability to continue making purchases through periods of low price levels.
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Initiate a course of action
There are no hard and fast rules when it comes to initiating a course of action. The important thing is to do something and do it now. When goals go unmet, it’s generally not due to having made a wrong financial decision. It’s due to not having done anything at all. It’s been said that the best time to have planted an oak tree was 20 years ago. The second best time is right now.
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Review and update regularly
Staying on course requires regular monitoring of your progress and updating. At least annually, review your insurance coverages to be sure they are keeping up with inflation and your current situation. Are your investments performing as expected and are on pace for achieving your goals?* Life’s event’s can necessitate a change in goals — a new baby, job change or relocation, change in employment benefits, even a death in the family.
*Past performance is no guarantee of future results.
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As with anything in life, without tangible financial goals, and specific tactics for achieving them, we can drift along through a lifetime of work and end up a financial failure. It’s trite but true:
Not everyone shares the same financial goals. Your specific goals will depend on a number of factors—your values, age, financial situation, tolerance for risk, and interests. So, it’s important to identify each of your financial goals and dreams and write them down. Then organize your goals by timeline.
- Short-term (less than one year)
Examples could be -- Emergency fund in case of a layoff, medical emergency or other unplanned expense
- Purchase of “big-ticket” items, such as appliances
- Other life style purchases, such as new clothes or a vacation
- Intermediate-term (1-5 years)
Examples could be -- Paying off debt
- Saving for college education expenses
- Down payment on a house
- New car
- Business opportunity
- Long-term (5+ years)
Examples could be -- Paying off a mortgage
- Vacation home
- Retirement
Return to top
Prioritize your goals
Short-term goals are the easiest to visualize and the easiest to attain. Attaining longer term goals, though, usually requires the installment plan — making periodic investments* over a long period of time. Unless you establish the habit of setting aside at least a small portion of each paycheck for long-term investment, you’ll likely just continuously fund a series of short-term goals. To achieve those serious long-term goals it takes three ingredients:
- An average ability to earn
- A little discipline to save
- Time
*Periodic investing by dollar cost averaging does not assure a profit and does not protect against loss in declining markets. Since such a plan involved continuous investment in securities regardless of fluctuating price levels of such securities, the investor should consider his or her financial ability to continue making purchases through periods of low price levels.
Return to top
Initiate a course of action
There are no hard and fast rules when it comes to initiating a course of action. The important thing is to do something and do it now. When goals go unmet, it’s generally not due to having made a wrong financial decision. It’s due to not having done anything at all. It’s been said that the best time to have planted an oak tree was 20 years ago. The second best time is right now.
Return to top
Review and update regularly
Staying on course requires regular monitoring of your progress and updating. At least annually, review your insurance coverages to be sure they are keeping up with inflation and your current situation. Are your investments performing as expected and are on pace for achieving your goals?* Life’s event’s can necessitate a change in goals — a new baby, job change or relocation, change in employment benefits, even a death in the family.
*Past performance is no guarantee of future results.
Return to top