Setting financial goals is
single most important thing you can do to take control of your finances. Your life can’t go according to plan if you don’t have a plan. You will continue to spend every penny you earn if you don’t plan for where you want that money to go.Now more than ever we have to plan for our own futures. Approximately 70 million baby boomers will reach retirement age within next 10 years. That is going to put an enormous strain on already strained social security system.
Alan Greenspan, Chairman of Federal Reserve, has stated that in order to keep this strained system going, retirement age will have to be raised or benefits will have to be cut back. The ever ballooning Federal Deficit is main cause.
It would be my guess that both of those things will happen and more. If social security is even around in another ten to twenty years, I’ll be surprised. The government’s plans for it are kind of up in air right now. The President would like to have us invest our own contributions. I would imagine that a program like that will take quite a bit of time and money to set up.
If you are looking at those social security statements you get every year a few months before your birthday, and making that part of your future financial planning by expecting that money to be there, you could be left holding an empty bag when you reach retirement age.
There was a time when our parents and grand parents could survive on their pension and social security and have it pretty good. Especially, if their homes were paid off. This is no longer true.
Many companies do not give pensions anymore, they have 401K plans instead. Due to inflation and an increasing amount of consumer credit card debt, many people do not contribute as much as they should or they make withdrawals when have a problem come up.
It is for this reason that setting financial goals and having a plan to work toward, is so important. You need to set short term, medium term and long term goals.
The short term goal might be paying down your credit card debt, medium term goal might be planning that family vacation you’ve always dreamed about but could never afford because of debt, long term goal might be a certain dollar amount set aside for retirement or that piece of property that you want to build home you want to retire to on.
In order to start setting goals you need to ask yourself some questions. You also need to be realistic. If you set goals too high at beginning, you won’t stick with it. You can always raise each goal and set new ones as you reach them. You won’t do that if you set them too high at beginning and then give up because they were totally unrealistic and unreachable.
