Even though everyone is in a different state of life, we are likely to have some short and long term personal financial goals. Setting tangible and realistic goals, following them, and tracking your progress is the key to success in achieving all of your these goals.
If you are married, it is absolutely essential that you and your spouse both share the same financial goals. You should develop your financial plans together, review your progress together, and contribute to the same goals together. Otherwise, achieving your personal goals may become difficult.
Determining what your short-term, mid-term, and long-term personal financial goals are is the first step. Some common financial goals are a dream vacation, a new home, saving for college, planning for retirement, and establishing an emergency fund. Once you and your spouse have agreed on your goals, the next step is to determine a good estimate for how much money you’ll need for each of them.
Determining an accurate amount involves discussion about your financial goals. If you want to save for college, ask yourself these questions: what percentage do you want to pay; do you wish to pay for a state school or a private school; and, what about graduate school?
Retirement savings needs depend greatly on the lifestyle you plan to lead once you are retired, as well as when you plan to retire.
Prioritize each of your personal goals in order of importance, and then determine how long you have to save for each of them. Retirement could be many years away, but your short-term goals could be in a year or two. Understand that small trade-offs could result in the completion of multiple goals. For example, instead of retiring at age 65, move it to age 70. Pay 75% of your child's education at a public institution, not 100% of a private institution. You might be surprised at the results.
Finally, figure out how much you’ll need to save per month to achieve your financial goals. Don’t be discouraged if the dollar amount is overwhelming. The important thing is to have a set of tangible financial goals to work toward. On a monthly or quarterly basis, you and your spouse should review your progress, and continue to refine your plan.
If you aren't meeting your goals, revisit your financial budget to see if there are any areas where you can cut expenses in order to free up money for savings.
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