Financial Finish Lines
The late, great Zig Ziglar used to say in his motivational talks, “if you aim at nothing you will hit it every time!” There is certainly a lot of truth in that statement. We need to know where we are headed. And, we definitely need to know when we arrive at our destination! But how can we be sure we’ve arrived if we weren’t sure exactly where we were headed? This is where financial goals come in. Or as we like to call them, financial finish lines.
Today we will talk about 3 very important financial finish lines we all must deal with at some point. The first one is our short term savings account. We like to call this an emergency fund. How much is enough? Most advisors recommend at least 3–6 months of living expenses. This is extremely important for a couple of reasons. #1 When you own stuff, stuff breaks. It’s good to have money in the bank to handle unexpected expenses. #2 As long as you are alive, life happens. Jobs get cut, children get hurt, and other things happen. Decide how much you want/need in your emergency fund and begin working towards that goal. Once you arrive at the finish line, move on to the next step of your financial plan. This can be a very freeing action step because you no longer have to think about “saving” money.
This leads us to the second important financial finish line – retirement investments. When do you want to retire? How much money do you need coming in each year of retirement to make ends meet? Once you’ve answered these questions, we can help you determine exactly how much you need to invest each month (and where to invest it) to manage your goals. Again, it is freeing to know you are on pace to work toward your retirement goals. This is a much better approach than just throwing extra money into an account if/when you have it.
This last financial finish line is one very few people ever give any thought to – consider setting a cap on your income. Yes, you read that right. How much income is enough for you and your family? One of the biggest mistakes people make is raising their standard of living every time they get a raise or have extra money. This makes losing your job or losing any source of household income much more devastating. By setting an income finish line, you also free up money each month for giving and blessing others.
These are just a few of the areas where financial finish lines are important. If you would like to talk further about this concept, feel free to give us a call.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy assures success or protects against loss and all investing involves risk, including the possible loss of principal.