Throughout all stages of life, we are caught between conflicting goals. We are twisted and pulled in different directions that we begin to forget what is we are truly after.
Nothing is more clear to me than working with clients who are trying to figure out what it is they want … The result is very clear and easy to see when their financial life is unfolded in front of me. When I hear “I want to retire at age 60″ but see a limited amount of savings. Or a more common one at my age is, I want to buy a house, yet there is a small amount of actual house savings.
Each life stage we go through presents us with a unique challenge.
When you are done with college, how do you pay down student loans while saving for a house on a limited budget? In your 30s when you are having kids and you find a great house to buy, how do you balance your budget, while still saving for retirement? While your kids grow up and go to college, how do you help support them while still saving for the goals that you have? When your kids are done with college and you finally have the cash flow how do you balance saving for retirement but still doing home upgrades? The list can seem exhausting, yet we must take hold and decide what we are after.
We are torn between conflicting goals.
Let these 5 tips be your guide to help you make a decision:
1. Save enough to get an employer match and save the rest to build your emergency funds. Do this before you save for a house. Without an emergency fund, purchasing anything major is a mistake. If something happens and you don’t have a fallback plan you end up in debt. A place you don’t want to be.
2. If you have an emergency fund, you should be saving between 10-15% of your income for retirement. This creates a new budget for you to create other goals around.
3. Don’t save in entirety. Spread out your savings goals. If you plan to save for retirement, a home remodel and a new car, why not spread your savings around? Prioritizing your goals and making one goal a higher percentage of savings helps to keep your goals on track. For example if you have $1,000 to save a month, save $800 into a house remodel fund, $100 for a new car and $100 for retirement.
4. If you have trouble saving, start small. The hardest part is to get started, if its $5, start saving $5, then work to double that the next month and keep doubling it.
5. Write or draw your end goal down! Research shows that we are more likely to achieve our goal if we write it down. It helps to keep us accountable and stay on top of our bad behaviors that drive us away from our end goal.
When is the last time you wrote down your long term goals? Do you want to retire? What age, what does that look like? Until we know what we want our savings will suffer.
Want someone to help you reach your goal, why not schedule a free consultation with yours truly a virtual financial advisor?