Check out these four tricks used to get you to spend more (without you knowing it).
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Most people dream about a nice retirement, sending their kids to college debt-free or building their dream home. The problem is that many people don’t know how to make their dreams become a reality. The first, crucial step in achieving your investment goals is writing them down.
Sounds weird doesn’t it? However, the act of physically writing down your goals really does help. It works like a switch, taking your goals from a distant dream to a vision that is ready to go to work. Yet, this important step is often overlooked. As a result, many people fail to reach their goals simply because they skip this first step.
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Briefly list any short-term goals.
The keyword here is “brief.” Think bullet points. The more detailed list comes later.
Short-term goals can be things you want to save for or purchase within the next two to five years. An example of a short-term goal might be buying tires for the car, finish furnishing the house or taking an overseas vacation. Classify these goals as needs or wants.
Make a list of long-term goals.
Again, make a brief list. Long-term goals are things you want five years or longer from now. Long-term goals are likely to be retirement, buying a home, or college savings. Ask yourself questions that help you determine what specific goals you have, based on where you are in life. For example, if you're in your early thirties, you might already be dreaming of a nice retirement or owning your first home. Ask yourself which will make you the most happy and give you a sense of peace.
Dig in to the details!
Now is when you get into the specifics. First, list your goals with the most important at the top and the least important at the bottom. Next, it’s time to get more specific with your goals. Instead of just listing retirement as a goal, give it a number by writing down how much money you want to have in your retirement account.
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Finally, all good goals have a time limit. Give yourself a specific time limit to reach the goal. If you’re 40 years old, then you might give yourself 20 years to reach your retirement goal. Do this for each goal you wrote down.
Here’s a short example:
- Retirement – Have $820,000 in retirement fund by age 60.
- College funding – Save $25,000 in eight years for daughter’s tuition.
- Dream house – Build our $300,000 dream home in next 20 years.
The Main Tip
Your job as an investor is to determine in clear and simple terms what your short- and long-term goals are. Remember, it’s your money, so be intentional. Once you have your list of goals, sit down with a trusted investing professional to help you further prioritize and reach your goals.
Need help finding a financial advisor? Find a trustworthy advisor that Dave recommends.