Goals

There are 5 primary ways to spend money:

  1. Paying Taxes
  2. Giving to Others
  3. Maintaining Lifestyle
  4. Paying Off Debt
  5. Investing for Future Goals
Illustration of financial buckets flowing down from income to taxes, debt, margin, living expenses, and giving. Margin flows into savings and investments.

This exercise focuses on Investing for Future Goals. Society has a long list of what we “should” do, but as you go through this, please keep in mind the Values exercise of keeping your habits in alignment with your core values.

I believe that the reason so many people don’t save for the future is that they feel doing so will sacrifice their quality of life. Let me be clear — I have seen people who have worked overtime and never taken vacations so they can have a great retirement. Sadly, some of those people passed away far too young so… that is not what I’m proposing.

However, imagine spending every penny you earn on every possible extra during your working years, then having to completely stop all fun activities as soon as you retire. Or worse yet, never having a “work optional” lifestyle and never experiencing the freedom of not having to go to work 40 hours per week.

By deciding what future goals are important to you, you can better decide how to budget in order to have enough money to support those goals.

Here’s an example of how that might look:

Savings and investments flows into an illustration of a bucket, which is then dispersed to long term goals such as dignity fund, pay off debt, retirement, lifestyle desires, family needs, legacy, and start a business.

The following list is by no means comprehensive and not everyone needs every bucket. Consider these possibilities to inspire you:

  • Starting a business might mean fulfilling a passion project or creating the income stream of your dreams.
  • Legacy may mean donating to church or charity or providing for your children’s future.
  • Family needs could be paying for a child’s education or a parent’s medical needs.

Lifestyle Desires are completely personal — the sky’s the limit.

Retirement can range from the stereotypical gardening and traveling to an exciting encore career. Remember that, unlike 100 years ago, we are living 20 to 30 years past the traditional working years.

Paying off debt is one thing your tax professional needs to be involved in because the biggest debt is usually a mortgage.

A Dignity Fund addresses the reality that getting older does have unique challenges. Even people who live active senior years may pay someone to do yard work so the house doesn’t look run down. On the other end of the spectrum, medical costs and nursing help can completely decimate an otherwise robust plan.

Exercise:

  1. Download a blank Financial Goals worksheet (PDF).
  2. Start with “Possible Goals” at the bottom of the sheet and consider prioritizing them by assigning an order.
  3. Choose buckets that are most important to you. Don’t forget to put down why they are important to you.

Once your goals are set, it may be difficult to see the path without guidance. That means it’s time to collaborate with professionals to plan your next steps, and figure out how to best achieve the goals.