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What are your top five financial objectives? Most people, when asked
that question, answer with general goals, such as achieving financial
security.
The fact is, many of us have never thought much about our financial objectives and do not have written financial goals. Instead, we waltz through our financial lives doing the best we can to meet monthly expenses.
Some financial objectives may conflict with one another, making it difficult to choose between them. For example, should you create an emergency savings fund, put money in the children's college funds, pay for Sally's braces or save for retirement? These choices are not easy to make under the best of circumstances. They are difficult to answer if you do not have a financial plan, and almost impossible to make in times of financial distress.
Although a 2004 study on New Year's resolutions conducted revealed that 28% of consumers resolved to get out of debt, many individuals are not doing anything to reach this goal. The key to financial success is having a financial plan that is reviewed periodically. But, where do you begin?
- Begin by having a family meeting to discuss and create financial goals.
It is vital that all members of the family are involved in creating
these goals because all members will be affected by the financial decisions
that are made. Make a list of your top financial objectives.
You should try to list all of the money-related things that are
most important to you. For instance,
- Creating an emergency savings fund (most experts suggest that
you should have approximately three-months of expenses in an emergency
fund).
- Getting out of debt - and staying out.
- Paying for your children's college education.
- Saving enough money to retire without having to change your lifestyle.
- Buying a house or upgrading your existing house.
- After making your list of objectives, choose your top five, making
sure that your spouse or significant other agrees with your selection.
Next prioritize your top five goals. Now that you have identified your
top five goals, you can begin creating a plan to achieve these goals.
- First things first. Track your spending and know where you spend every
dime. Once you know where your money is going, you can begin making
decisions about what's most important. For instance, each time you spend
more than pocket change on a purchase that does not help you attain
one of your goals, ask yourself whether the outlay is really necessary
or more important than achieving your goals.
For example, let's say that your highest priority is putting $10,000 in an emergency savings fund. And, let's say you want to take a trip this summer that will cost $2,000. If you take the trip, you will be an additional $2,000 further from the financial security that an emergency fund will provide. Now, no one is suggesting that you should disappoint your family and not take a family vacation, but you should consider whether you could take a less expensive vacation and put the difference in your emergency fund.
If two goals are similarly important, choose the one that causes the least harm. For example, if you do not have adequate emergency savings and you think that there may be a work stoppage this fall, should you - put money in your emergency savings, put money in the children's college fund, or save for retirement? Under the "do what causes the least harm policy," you should put money in your emergency savings fund because you can always put money in the children's college fund and save for retirement, but you may not have a second chance to build up your emergency savings.
Union members expecting a disruption in income should not delay in developing
a financial plan, including your top five financial objectives. Begin
now to reduce debt, build savings, and free up cash flow that may be needed
later.
Need professional help with your debts? The Union
Plus Credit Counseling program provides a free credit counseling session,
budget analysis and advice to union members. Call 1-877-833-1745 or click
here for details.
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