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Establishing financial goals                                                                                                                                                  

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Overview

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The first thing financial advisers address is: what is it you want to accomplish.  What are your goals?  Some of the typical responses include:

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  • Get out of debt.

  • Retirement planning 

  • Pay for all or part of my kid(s) college education

  • Make sure my family is going to be OK if something happens to me

  • Save to purchase a house or a vacation

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To begin any Financial Planning, one first needs to determine their “Financial Mission” and their “Financial Goals & Objectives”.  Once a "Financial Mission"

and "Financial Goals & Objectives" are documented, they will be used in the

future when balancing wants and needs.i

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To illustrate how to determine a “Financial Mission” and your “Financial Goals & Objectives” we will use an example of Bob and Jane.

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Bob and Jane Thompson are 45 and 42 years old.  Bob works for a local auto part manufacturer and has an annual income of $75,000.  Jane is a full-time homemaker.  Bob and Jane have been married for 10 years.  They have two children, John (age 5) and Lindy (age 2).  After a few weeks, Bob & Jane have documented the following: 

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            Bob & Jane's financial mission

 

To be able to retire with enough money that they will be comfortable and to have insurance to protect them incase something comes up and prevents them from reaching their goal themselves.

 

Bob & Jane listed a bunch of goals and then took some time to narrow them down to 4:

 

Bob & Jane’s general goals (Prioritized)

 

1.       Save for retirement

2.       Save for children’s college education

3.       Reduce debt

4.       Purchase life and long term care insurance  

Bob & Jane listed their goals in the order that was most important to them(From 1 to 4).

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By determining what is important to you in the future, you can begin to visualize how many different things get neglected.  You will most likely end up with a long list of everything that you would every like to accomplish.  Unfortunately, the reality of life is that very few people have the resources to accomplish everything in life that they would like.  By writing your goals down and then focusing on 4 to 6 of them you have a chance to satisfy some of them.  By prioritizing them, we can remain focused on satisfying them in order of importance.  All too often, people never reach any of their goals.  This is because their limited resources get spread across many goals and all the goals get partially satisfied.  

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The Financial Swami has made it simple for you; just use the links to pull-up a worksheet that will assist you in documenting your financial goals.

 

Swami Financial Goal Worksheet 

 

Once you have listed your financial mission statement and your goals, try to identify the 4 to 6 goals that are the most important to you.  This will be difficult, but just because some of the other goals aren't in your top 6 list, doesn't mean you won't be able to work on them.  The top 4 to 6 just starts to prioritize the list.  As you focus more of you efforts and resources towards the narrowed list, the more likely you will satisfy a goal and be able to add a new one to the list.  Once the list is narrowed to 4 - 6, list them in order of importance (like the Bob & Jane example).  After you have prioritized them, you will be able to go to the different areas inside the Financial Swami website to learn how to reach the goals.

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