The #1 Question

QUESTION: WHAT ARE YOUR FINANCIAL GOALS?!

          If you hesitated in any way after reading this question, STOP! How do you expect to make the right financial decisions if you do not have financial goals to guide you? The answer is … you won’t. Successful businesses have financial goals, governments have financial goals (excluding the US), the wealthiest people in the world have financial goals. To think that you can scale the financial summit without a vision is foolish.

OPTION 1: You can claim you know everything you need to know about personal finance. If this is you then we are wondering why you even clicked on this website to begin with.

OPTION 2: You understand that everyone can benefit from increasing his or her financial savvy. If you fall into this category, then we personally welcome you to stay and learn the essentials of personal finance. Our mission is to make your financial goals a reality.

 

It is important that financial goals are SMART and you explain how you will achieve them…

  • Specific - goals must be clear cut and to the point, no ambiguity or vagueness
  • Measurable - implement indicators of success to benchmark progress
  • Attainable - goals should make you stretch yet be realistic
  • Relevant - goals must relate to overarching, unified mission 
  • Time - it is key that goals have a specific, reasonable timeline for achievement

Example of poor financial goal: I want to be rich!

Example of weak financial goal: I want to retire at age 65 with $1,000,000.

Example of average financial goal: I want to retire at age 65 with $1,000,000. To accomplish this, I will follow a budget and invest in the market.

Example of good financial goal: I want to retire at age 65 with a minimum of $1,000,000. To accomplish this, I will “pay myself first” by having money deducted from my paycheck and directly placed in my retirement account. According to my budget and historical market trends, I should be able to accumulate at least $1,000,000 if I contribute 10% of my annual salary to retirement funds.

Example of excellent financial goal: I want to retire at age 65 financially secure and independent, which will require a minimum of $1,000,000 with inflation and the future cost of living factored in. In order to accumulate at least $1,000,000 by the age of 65, I have calculated that I must maximize my employer-sponsored matching retirement plan and contribute 3% of my annual salary to an IRA. The money in these retirement accounts will be placed in a diversified investment portfolio and adjusted for risk over time. If the markets continue their long term performance and all goes according to plan, I will retire with well over $1,000,000. This will allow my spouse and I to thoroughly enjoy retirement and provide for the well-being of our children for years to come.

* Important Note: Be sure that everyone involved with the financial decisions completely understands and agrees with the financial goals. If there is disagreement, the financial goals will not be accomplished. Once common ground is reached regarding the financial goals, it is important that all members sign their names acknowledging their support. It is also beneficial to post financial goals in a location where you will see them at least once a day. Having a reminder of what you are working toward maintains focus and greatly increases the probability of achieving successful results.

Once your financial goals are established, you are ready to move on to the following lessons: