Don’t you just love the announcers for televised professional soccer matches? I find it hard to follow all of the action, but I sure know when someone scores, as that drawn out “GOOOOAALLLL!” booms out over the airwaves.
It comes to mind every time I think of the most important aspect of any sort of financial planning. What are your GOALS?
Sometimes that’s a hard question to answer. You’re likely to have more than one. Some are short-term like buying a new(er) car or paying for a vacation this year; some are longer term like sending kids to college and funding your retirement. Fact is, you need to think about them, and prioritize them, if you have any chance of developing a reasonable plan to save for them.
So break out a piece of paper or open up your spreadsheet software and let’s get your goals written down. Don’t worry about timing or amounts yet, just get everything in one place. And be sure to include your spouse or significant other in the brainstorming, as this is a definitely a household activity.
The next step is to start thinking about your financial goals in terms of their importance to your family. This exercise will help you organize your goals into a sort of savings hierarchy. The main reason for this step is to prioritize your goals so that whatever savings you are able to achieve will be applied to the most important goals first.
Over the coming weeks, I’ll discuss ways to find extra savings for your financial goals and how to save for longer term goals through specially designed accounts like 529 plans for college education and tax-deferred investing options like IRAs and 403b plans for retirement savings.
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