Everyone know that setting financial goals is the first step towards stability and security.
Too often, though, life gets in the way: temptations abound, emergencies happen, and our best-laid plans get derailed.
What can we do to help us stay on track despite inevitable bumps in the road? Follow these steps:
- Prioritize! When you set goals, list them in order of importance. Contributing to your retirement savings accounts should top the list. This is especially true if your employer offers matching contribution that is triggered only after you contribute a certain amount first. That’s a critical benefit towards your future that you do not want to lose. Other top items may include: building an emergency fund and saving for a mortgage or children’s college. Goals such as saving for remodeling or for a vacation are important too, though probably not as high on the list.
- Set timelines for each goal. Create a timeline to reach milestones for each separate goal. Determine how much savings you expect to accumulate for year 2, year 5-10 and year 20-30. Setting incremental markers will enable you to see your progress and boost your chances of continuing to save.
- Create separate accounts for each goal. The best investments are usually sorted by different accounts. Retirement funds are usually better invested when they are part of specific pension, IRA or Roth programs. Likewise, college savings plans usually offer perks and tax credits that maximize savings. And having your savings separated into distinct investments will reduce the temptation to tap into one fund for anything other than what it’s specifically earmarked for. The penalties are also good deterrents to prevent premature withdrawals.
- Commit to saving. Your savings goals are personal and designed to help you meet your needs. Instead of simply allocating whatever is left over each month from your basic expenses, commit to saving a specific amount each month for each objective.
- Set up automatic payments. Set it and forget it. Whether directly from you paycheck or from your checking account, set up automatic payments to your savings accounts to ensure that you stay on track and never miss a month. Review it annually to increase your contributions as your income grows.
- Meet with a financial planner. An expert can help you set goals, prioritize them, and review your progress regularly. He can also help you create a portfolio that is diversified, balanced and based on your personal needs, risk tolerance and age. You should also meet with your planner each year to review the progress of your portfolio and make necessary adjustments.
At Silverman Financial, we work with our clients to create customized financial plans that support growth and stability. We continually monitor market fluctuations to make sure your investments continue to match your needs and goals. We welcome new clients with complimentary consultations.