As the famous philosopher and hall of fame catcher, Yogi Berra once said, “If you don’t know where you are going, you might wind up someplace else.”
Unfortunately, this is exactly how most people run their family finances. The focus of your financial plan today should be on goal setting and developing such a compelling vision for your future that you can’t wait to get out of bed in the morning and work towards that vision.
A good starting point for goal setting is to think about how you’d like to spend your future time – the details of each day, week, month, and year. Don’t assume that you must punch the clock each day; developing the vision doesn’t mean that you’ll be starting next Monday, but it should pique your curiosity enough to wonder what may have to happen for this to become your reality. That’s where the financial counsel and forecasting may shed some light on the time frame and reality of your short-term day-to-day activities.
Think of your ideal use of time in terms of the categories or values that are most important to you. These may include family, community, professional, spiritual, and/or personal time such as fitness or hobbies or whatever other category is meaningful to you. Now rate your satisfaction with how you are currently enjoying your time spent in each of these areas, and ask how you may improve your satisfaction with your time devoted to each place. Here you’ll dig out those really fun things that you used to do, but somehow have been lost in your busy life. Make this the year that these meaningful and invigorating activities find a place on your calendar.
The next part of goal setting involves planning for the consequences or costs of living out your meaningful purpose. The first consequence is frequently discovering and trying to eliminate any obstacles that are preventing you from living the dream today. Some may be painfully obvious, such as you simply can’t afford to move to Maui and surf every day. But you can certainly calculate what it may take to afford that lifestyle, and design a plan to get you there. Perhaps there is some middle ground that finds you in a wet suit in the northeast or taking annual trips to Maui.
Also, think about what you’d like to happen if something goes very wrong. Whether you become unemployed, get very ill, or pass away pre-maturely, what would you like to happen to your assets and happen for your loved ones? While this may not be the most fun part of goal setting, it may be the most meaningful part to you.
The one thing that you can guarantee in this process is that things will change. What is important to you now may or may not matter in a few more years. This imaginative part of planning is just as important as the dollars and cents. Your personal needs and goals should be the centerpiece of all future planning discussions.
Note: The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendation for any individual. Please remember that past performance of investments may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this post serves as the receipt of, or as a substitute for, personalized investment advice from Vermillion Financial Advisors, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed within this newsletter to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.
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Eight commandments of building a strong financial foundation
Charles Schwab