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Start by writing down each of your
goals on a 3" x 5" card.
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Create two stacks - goals you want
to accomplish within the next five years or less and goals that will
take longer than five years (you'll save for these goals differently).
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Sort the cards within each stack in
order of priority, based on how hard you are willing to work or save
to reach each goal. Make retirement a priority.
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Write on each card what you need to
do to accomplish that goal, plus when, what it will cost and how much
you'll need to save each month to reach your goal.
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Prioritize again, creating a
"dream" stack and a "reality" stack to guide your
saving and spending.
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Create a snapshot of your finances
by calculating your net worth - the total value of what you own minus
what you owe. Include in this snapshot of your financial resources
items such as personal possessions, vehicles, home and other real
estate, checking and savings accounts, insurance policies, stocks and
retirement plans. On the liabilities side, consider your home
mortgage, credit card debt, student or auto loans and taxes/capital
gains owed.
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Envision your retirement and the
monthly resources you'll need in retirement, along with when you want
to retire.
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Estimate how large your nest egg
will need to be to "buy" your retirement goal.
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Use a worksheet or software program
to help calculate how much you'll need to save every month and the
return on investment you'll need to reach your goal. Some useful
financial calculator Web sites have been provided in the Department of
Labor's new booklet on page 20.
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Create a spending plan for your
monthly income that starts with your "payment" to your
retirement savings plan designed to build the resources you'll need
for the retirement you desire.
*From Savings Fitness: A Guide to Your Money and Your
Financial Future, available to consumers by the U.S. Department of Labor
and the Certified Financial Planner Board of Standards.
