:: SAVINGS FITNESS - Part 1
Posted by Andrew
A GUIDE TO YOUR MONEY AND YOUR FINANCIAL FUTURE
Getting Fit…
Managing Your Financial Life
It starts with a dream, the dream of a secure retirement. Yet like many people you may wonder how you can achieve that dream when so many other financial issues have priority. Besides trying to pay for daily living expenses, you may need to buy a car, pay off debts, save for your children’s education, take a vacation, or buy a home. You may have aging parents to support. You may be going through a major event in your life such as starting a new job, getting married or divorced, raising children, or coping with a death in the family.
How do you manage all these financial challenges and at the same time try to “buy” a secure retirement? How do you turn your dreams into reality?
Start by writing down each of your goals on a 3″x 5″ card so you can organize them easily. You may want to have family members come up with ideas. Don’t leave something out at this stage because you don’t think you can afford it. This is your “wish list.”
Sort the cards into two stacks: goals you want to accomplish within the next 5 years or less, and goals that will take longer than 5 years. It’s important to separate them because, as you’ll see later, you save for short-term and long-term goals differently.
Sort the cards within each stack in order of priority.
Make retirement a priority! This needs to be among your goals regardless of your age. Some goals you may be able to borrow for, such as college, but you can’t borrow for retirement.
Write on each card what you need to do to accomplish that goal: When do you want to accomplish it, what will it cost (we’ll tell you more about that later), what money have you set aside already, and how much more money will you need to save each month to reach the goal.
Look again at the order of priority. How hard are you willing to work and save to achieve a particular goal? Would you work extra hours, for example? How realistic is a goal when
compared with other goals? Reorganize their priority if necessary. Put those that are unrealistic back into your wish list. Maybe later you can turn them into reality too.
We’ll come back to these goals when we put together a spending plan.
