Goals

Goal setting is a powerful procedure for personal financial planning.  Setting goals helps you choose where you want to go in life and keeps you focused on the results you want to achieve. Properly set goals can be incredibly motivating.  By knowing precisely what you want to achieve, you know where you have to concentrate your efforts.  You may also quickly spot the distractions that might prevent you from reaching your goals.

When you are planning to retire, setting realistic goals is fundamental because you need to make sure your income will cover all your planned expenses. 

I recommend, first, to determine what your basic living expenses will be during retirement.  A good budget is critical for this, and you can find more information about how to put one together by clicking budgeting.  Next, decide how much you want to spend in such areas as travel, purchasing a new car, home remodeling, maintaining a second home, paying off loans, weddings, gifts, and so on.

Most goals involve tradeoffs.  For example, while you may usually be able to afford three vacations annually during retirement, you might not be able to remodel your kitchen during the same year.  Instead, if you are set on remodeling your kitchen, you might choose to take only one vacation that year. 

I have developed a very useful goal setting handout that you can download by clicking Goal Worksheet.  When asked about their goals, most people have difficulty articulating them.  But if you ask them about their problems, they can quickly recite them--and in detail.  So the worksheet I recommend for you begins by asking you to name one concern, and then list the potential solutions to that concern, as well as the pros and cons of each alternative.  For example, suppose my concern is that I am overweight.  What are my alternatives?  I could eat less, exercise more, change my diet, and reduce alcohol consumption.  What are the advantages of each of these alternatives, and what are the disadvantages?  List them in the form. Finally, select the alternative you think makes the most sense, and that becomes your goal.  For example, I will make my goal to exercise more.

The second page of the goal worksheet will ask you to specify such things as when you plan on reaching your goal, how much money is needed, what the benefits are, as well as what consequences and sacrifices you will need to make. Finally, it asks that you put together a step by step plan of action to achieve this goal.

Use this worksheet to turn each of your financial concerns into a goal. You will have evaluated your alternatives, reviewed the constraints and prepared a detailed plan of action to achieve your goal.  If you follow each of these steps, you should achieve all of your goals.

For more information on goal setting, call Professor Ulivi at 714-771-6000 or email him at professor@ulivi.com