Setting Financial Goals: Don’t Ignore the Monster in the Closet

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Setting financial goals for your family can feel like an overwhelming, and frankly scary, undertaking. Worse, though, is ignoring that monster in the closet until it’s too late to make a plan for your child’s education or your own retirement. So, you fall in love, get married, and start a family. During this time, there are too many distractions for most families to sit down and map out a plan. After the dust settles, the worry of financial goals usually hits the to-do list. When this time comes, it’s important for you to be part of that process. And keep this in mind, establishing goals and a strategy will ease worry and stress about your future. You may need to adjust your goals along the way, but having a blueprint to start with will make things a lot easier.

Break it down into manageable parts. Take it one step at a time and consider the following guidelines when you sit down to talk with your financial advisor.

  1. Establish a list of goals for the entire family. Do this together and write them down or incorporate into a financial software program.
  2. Identify everything that may require a significant investment or expense: tuition, vacations, weddings, paying off debt, a second home, retirement plan, and portfolio investments.
  3. Break the goals down into different time horizons. What will you need to address in the next year versus the next ten, fifteen, and twenty years?
  4. Be realistic. Identify reasonable financial goals based on your income and career objectives, not a laundry list of dreams and wishes.
  5. Financial goals should also incorporate a safety reserve to help weather the burden of an unexpected event like the loss of a job or the need to care for a dependent parent.
  6. Review and continuously adjust for life events that impact existing goals.

Through this process, couples often discover that while all seemed perfect at “I do,” their goals aren’t lining up with each other a few years down the road. This is particularly the case when it comes to retirement. In fact, studies show that 80 percent of couples disagree on at least one major aspect of their retirement planning. Differences include when and where to retire, how to handle expenses, and how much to leave for children and other family members. When this monster rears its ugly head, find areas you agree on first, then tackle the differences.

Communication is vital in every relationship, especially when it comes to something as important as establishing financial goals for your family. Like marriage, creating a plan requires trade-offs and adjustments. The earlier you discuss and negotiate, the better the chances of achieving a satisfying and fulfilling family life. Get started today and put that monster to bed.

Melissa Stewart is a CERTIFIED FINANCIAL PLANNERTM practitioner and Financial Advisor with the VanderWeele Stewart Group of Raymond James.  She speaks at local events and is passionate about financial education in the community. Visit www.vswealth.com to learn more. The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNERTM and federally registered CFP (with flame logo) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. Photo: 4774344sean

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