Everyone can reach financial goals such as an early, comfortable retirement or a legacy for our children.
Investing early and often helps, as does making a financial plan and sticking with a budget. However, it can be difficult to avoid spending on impulses if we aren’t clear on our purpose, priorities and goals.
Here’s a guide for building a foundation for financial success.
Step 1--Live on Purpose
At the end of your days, will you look back on a life well-lived, that made a difference, or one filled with regrets?
Figuring out your purpose now can not only help you make the right decisions in the short-term, it can help ensure you’ll like what you see when you look back over your life.
The big question is “why am I here?”
To find the answer, ask yourself questions like:
What are my gifts?
- What am I passionate about?
- What are some of the needs I have identified in the world?
- What contributions would I like to make to the world?
- What roles do I play and with whom do I play them?
The relationships we develop and the people we help will live on long after we are gone.
How does knowing your purpose help build wealth? If you know why you are on earth, the knowledge will guide what you do with your resources. Achieving your purpose may take money. Watching your investments grow will motivate you to remain disciplined in building your nest egg.
Step 2—Clarify your Priorities
As we think about our purpose, we must consider how to live it out day to day. Your priorities determine how you spend your time, energy and money.
You have probably heard it said, “No one dies wishing they had spent more time at the office.” Deathbed regrets are usually around things people did not do, relationships they did not value or opportunities they did not take.
Money gives us the freedom to live our purpose. Evaluating, clarifying and understanding our true priorities will give us the motivation to spend and save in line with this purpose.
For example, if your purpose is to build a better future for your children’s generation, your priorities might include spending as much time as possible with your children, teaching them your values.
These priorities might guide you in making decisions such as cooking at home with your children rather than eating out, or going on skill-building outdoor adventures vs. spending on lavish resource-consuming vacations based solely on pleasure.
Step 3--Set and Act on Goals
To get from the idea stage to reality takes goal-setting and action. Little is accomplished without clear, written goals.
Here’s an example of the power of goals:
In his book, What They Don’t Teach You at Harvard Business School, Mark McCormack describes a study of MBA graduates from 1979-1989. New graduates were asked if they had clear, written goals for their futures, and plans to accomplish these goals.
Three percent had clearly-written goals and plans, 13 percent had goals but not in writing, and 84 percent had no specific goals at all.
Ten years later, the three percent with clearly-written goals earned ten times as much as the 97 percent who did not have clear goals.
Here’s a brief outline for goal-setting and -achieving:
- Set a specific goal
- Determine the benefits of achieving the goal, and the losses to be avoided from not achieving the goal
- Consider obstacles and solutions
- Develop action steps with completion dates
- Select a method of accountability
- Determine methods of tracking progress
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This content is developed from sources believed to share accurate information, and provided by Kelly Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and materials provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.