Goal setting is not just about your fitness goals, your career goals but even in your financial goals, setting goals for your budget can give you structure and a clear vision of the direction you are currently heading and where you would like to go in the short-term, medium-term and long-term future.
In last week’s blog on the ABCs of Basic Budgeting, we talked about (A) – adding up your income and expenses, (B) – be in the black, and (C) – create your personal and personalized budget.
This week, we will take another step towards setting yourself up for success in your finances through budgets and financial goals which you integrate into your budget.
Once you have reviewed the ABCs of your budget, you can start to add some goals to help you achieve your financial goals. Some goals I ask clients who are going through divorce to consider are where they would like to see their lives in 5 years, 10 years, and even 20 years. Some of my clients are going through what is called a gray divorce – referring to long-term marriages who have come to the decision of going their separate ways. One example of a couple going through a gray divorce are Bill and Melinda Gates. Yes, I see the eyes rolling. When you’re one of the world’s richest couples, you don’t have to think about budgeting goals. Let’s table the Gates’ divorce for now.
Recently, I was speaking with a friend recently who is going through a divorce and I mentioned that no couple who decides to get married are entering marriage thinking they will be getting divorced one day. The reality is that many couples no matter what the idealized hopes and dreams may be regarding marriage may end up getting divorced for one reason or another. When someone gets married, one enters the marriage starry-eyed and what their forever future into the sunset will look like. They get married, start their careers, have children and do life together with hopes that one day, when they retire, they can start living life as empty nesters. Some of my clients were hoping to get their RV and go road tripping in their retirement and visit every one of the lower 48 states and even into Canada and Mexico. Here in the State of Washington, yes, where Bill and Melinda currently reside, many families dream of owning a second home on one of the many islands, the Peninsula, where the Olympic Mountains are at, or in any of the mountain regions or lakes. So, whether you are going through a divorce or not, you may have some dreams about where you would like to see your life in the near- or longer-term future. Setting goals and working with a budget can be one way to realizing these dreams.
If you happen to work with a financial advisor, we have different programs we can use to help put a financial plan together for you. In the planning process, we can figure out what a workable goal may be for you. Whether it is a new car to replace your existing one in a few years or to help you purchase that home on the island or the RV, we can look at what your timeline looks like to achieve this goal, how much to set aside or to figure out how much you are able to set aside and what type of investment strategy to utilize.
If it is a short-term goal, where you may need the funds in the next year or two, say for example for a down payment on a new house, it would be prudent not to tie up the funds into the stock market, as no one can determine which way the stock market will go in the next few months. If interest rates are decent, savings accounts or a CD (Certificate of Deposit), may be options for parking your money. If your goal is to buy an RV when you retire in 10-15 years, there may be strategies to review and how to best achieve this goal.
So going back to Bill and Melinda Gates, in their 27-year marriage, they have set some financial goals. When Microsoft was first starting out, the Gates’ did not have the billions they have currently accumulated. They too set financial and budget goals for themselves and their family, as they went from husband and wife to parents to three children. They worked with financial experts to help them with their goals and to help strategize as they were building their empire. We all have to start somewhere if we want to reach our dreams and our goals.
Whether you are working with a Money Coach to help you understand some of the basic budgeting principles and financial goal-setting and planning or you have a Financial Advisor, who can help put together a long-term financial plan to help you reach your financial goals, taking the first steps to think through what you would like for your short-term, mid-term and long-term life scenarios is essential.
If you would like to speak to us at Foundations Divorce Solutions about money coaching or financial planning, please reach out to us. We would love to put together a plan for your future.
Next week, we will review the “D” word – Debt. Stay tuned!