What are your goals? This is a question that you’ll inevitably be asked in one way or another if you begin working with a financial planner. I work with a lot of clients who are in their 30s and 40s and it seems to be a difficult question to answer for most of them. Clients often tell me that they’re not sure what their goals are (or what they should be) and they’re looking for help in defining them.
Balance Living for Today and Saving for Tomorrow
When a financial advisor asks you what your goals are, they’re probably asking more specifically about your retirement goals. When do you want to retire? How much do you want to spend in retirement? Do you want to travel? Do you want to give money to your kids? Those types of things.
The issue with that is it ignores a huge part of your life – and the financial goals during that time – skipping straight to retirement. Granted, the “typical” financial advisor isn’t working with 30 and 40-year-olds.
However, it’s important to live a lifestyle that makes you happy today while also responsibly saving for the future that you want. This is going to look different for everyone.
Some people sway more towards saving more for retirement and spending less now so that they can have greater flexibility. Some people would rather spend more today and enjoy life while they’re young rather than save a ton for an uncertain future.
I think it’s important to find a good balance for you. Not living life while you’re young because you’re saving so much for retirement and not saving enough for retirement while you’re young because you’re busy living life can both lead to regret.
Become More Clear on What You Want
There’s no perfect answer but we can take some steps to become more clear on what we want, both today and in the future. It can be daunting to get started. It’s important to remember that setting financial goals is not a one-time thing.
Financial planning is an iterative process that needs to be updated frequently. That’s why myself and many other financial planners want to meet with our clients at least annually to update their financial plans and course correct along the way.
So, if you don’t know what your goals are, how can you figure it out? Here are 5 questions to consider that I think can help you get a little more clear on what you really want out of life, and subsequently, what your financial goals are.
- What’s on your bucket list?
- What do you love spending money on?
- What do you hate spending money on? What are the things you see other people spend money on that you think are stupid or ridiculous?
- Think of your parents or someone else that you know who is retired. Would you want your life to be similar to theirs? Or would you want it to be different? How?
- Imagine that you were told that you have 5-10 years left to live. You’re financially secure and will never have any health complications, but will have no notice of when you will die. What would you want to do between now and then?
Prioritize What You Want to Achieve and Adjust Accordingly
In a blog post titled Spend Better: 5 Ways to Be Smarter About How You Use Your Money, Eric Roberge writes: “Everything with your finances starts with getting clear on what matters to you. If you don’t know your priorities, your values, or your goals, you will never be able to make sound decisions on how to use your money because you lack direction.”
Of course, life is a balancing act. We have to balance living for today and saving for tomorrow. This is where living a lifestyle of spending below your means provides flexibility to not only reach financial goals today, but also save for goals in the future as well.
Also, we have to find out what’s realistic for our situation. We can answer the questions above and dream of these great goals, but what’s the point if they’re not realistic? Sometimes setting a baseline financial plan and working from there can help.
What you may find if you take some time to answer the questions above is that what you really desire might require some big lifestyle changes. And that’s okay to make those changes if they lead to what you really want to accomplish in life.
If you don’t sacrifice for what you want, what you want becomes the sacrifice.
Do you know what your goals are? Or do you still need help figuring it out?
