Financial objectives

Most people, on being asked the question ‘what are your top three financial objectives? ‘ Reply mentioning general goals such as achieving financial security.  Not enough of us pay much attention to considering which financial objectives matter the most.  We tend to muddle through our financial lives spending to cover our ongoing day-to-day commitments unless our circumstances adversely change.

Following this approach your most important objectives risk being left unfulfilled.  Our object is to avoid this by helping you identify the financial goals that matter most to you and making sure they happen.
Ii is not as easy as it sounds, as financial goals continuously clash with each other.  Ideas of equal merit arise but only one is affordable or the time available means that only one has a chance of success. Choices such as how much provision should you make for your children’s higher education as against your retirement requirements.

In order to achieve what you want most, first decide which goals take priority.  Secondly work towards the lesser goals only after the important ones, while not letting the secondary goals drift.

An early start is desirable

You can enjoy the good fortune of time if applied early, even if only a small amount of money is set aside at compound interest.  Interest can show extremely good results over long time periods. A small snack costing about £0.50 a day invested in a tax-deferred account paying 5% a year compounded on a monthly basis will accumulate to £2,362 in just ten years and to £12,657 in 30 years.

Making an early start to a saving plan is the key to getting the best results.  Based on the results of a typical Individual Retirement Account scheme.  A woman starting at 20 years old contributed £1,750 per year to a plan for ten years and then let the amount accumulate until retirement at 65 years amassing £374,500 without any extra contributions after ten years.
Her husband started the same scheme ten years later at 30 years old and contributed £1,750 a year until the age of 65 and amassed a sum of £338,625 about 20 percent less.

Use time, start early and keep the payments up.  If the couple had started at 20 years old and kept the £1,750 a year contribution, they would both be worth £700,000 on retirement at 65 years.

Getting underway

Try to set out all the money related things that fire your imagination and involve your spouse or significant other, this is an exercise that should be done together because it’s defining your lifestyle.   From the very start of earning money try to consume only 85 to 90 percent of your earnings diverting the 10 to 15 percent into long term savings.and let time do its work. The following is a typical list drawn from my survey of students.

An emergency fund to cover 3 to 6 months earnings

Getting debt under control and getting out of short-term debt

Buying and furnishing a house

Providing for child minding of very young children

Providing assistance to your parents in their old age

Having adequate life assurance to meet each phase of family life

Assisting your children through university or apprenticeship

Making adequate provision for a comfortable retirement

Providing adequate transport for family and employment needs

Have a found for the pleasures of life, clubs, theater, entertainment, charities and presents, etc.

Make provision for funeral expenses

Each person’s list will be different reflecting culture and lifestyle the first listing can be quite random and should allow for the emotional as well as pragmatic content; basically this is about lifestyle.