To help pursue your financial goals, you need a plan to help you get there. These five basic tips can help:
- Set exciting goals. Putting money aside for a distant goal, rather than spending that money now, is a difficult thing for most people to do. To make it easier, set exciting goals that will motivate you to pursue them. For instance, rather than "saving for retirement," make your goal "to retire at age 60 with $1,000,000 in investments so I can travel and golf." Then quantify your ultimate goal and interim goals, so you'll have a way to track your progress.
- Consult with a financial advisor. The number of decisions that must be made to help ensure you meet your financial goals can seem overwhelming. Even if you have a basic grasp of some financial areas, you may be unfamiliar with other areas. A financial advisor can help coordinate your entire plan, making sure all financial areas are adequately considered. A financial advisor can also monitor your progress. Sometimes you feel more committed to goals when you know someone else is also watching your progress.
- Determine the financial issues that are causing you problems. Almost everyone has difficulty coming to grips with some aspect of their financial life. Perhaps your credit card debt is becoming burdensome, making it difficult to find money to save. Maybe you don't understand investing basics and have left your money in a low interest-bearing savings account. Or you may have totally ignored estate planning, leaving your spouse and children at financial risk if you die. Whatever area is causing problems, resolve to make strides in overcoming it this year.
- Spend less than you earn. The amount of money left over for saving is a direct result of your lifestyle. Your lifestyle decisions will impact you now and in the future, since you will typically want a similar lifestyle after retirement. To get a grip on your spending, take time to analyze your expenses and to set a budget. Try reducing nonessential expenditures, such as entertaining, dining out, and vacations. Another strategy is to find ways to spend less for the same things. For instance, obtain car insurance quotes from several companies, placing any premium reductions in savings.
- Save it before you see it. If you have to find money to save every month, you'll likely find there isn't much left after all the bills are paid. Typically, a better strategy is to set up an automatic savings program where money is automatically deducted from your bank account every month and deposited directly in an investment account. Another good alternative is to sign up for your company's 401(k) plan, having funds withdrawn every paycheck. Try to save at least 10% of your gross income. (Remember that an automatic investing plan, such as dollar cost averaging, does not assure a profit or protect against loss in declining markets. Since such a strategy involves periodic investment, consider your financial ability and willingness to continue purchases through periods of low price levels.)
If you'd like to discuss these tips or others to help you pursue your financial goals, please call.