Oftentimes when I meet with new folks I hear things like "I thought I would be further on by this time in my life," or "We're not doing as well as we thought we would have," or something similar. In short, it seems that the goals and future that most of us set for ourselves seem to be just out of reach or otherwise unattainable. The big question is why?
I've always said that life is not a simple task. Going from point A to point B is not a straight line: between those two seemingly direct points are a thousand points in between: I call those small points ... Life. As human beings, it's strange: some things we know are (financially) coming we ignore until they're right here, and then we panic. We know our kids are going to go to college, but most fail to plan for their tuition costs. From the time we start working, we know at some point we will want to retire: but put off planning and making contributions until statistically we reach 50, and then start thinking about it, or actually panicking about it. There always seems to be the money to do the things we want to do in present time: take a vacation, go shopping, buy luxury items: but when it's time to contribute to the life destinations- college and retirement mostly- the long term needs gets shelved until one day we wake up as if we had no knowledge the day was coming. While it's understandable we have to put the fires out as they flare up on a daily or monthly basis, it's not OK to make believe those long term goals don't exist ... they will eventually rear their ugly head to bite you on the bum and give you sleepless nights. This my friends is what I call Life ... and it's different for all of us. We all have different coping mechanisms and rationales, but the end result is the same: falling short of our financial goal and failing to reach what could have been an attainable financial objective.
We all have dreams. Whether it be a home, vacation, sending our kids to college or retiring, we have dreams. Unfortunately, in our economic world these dreams cost money. For most of us who don't have a gazillion dollars in savings, we have to save over time to achieve our goal- the money doesn't magically appear. It takes time, structure and a bit of intestinal fortitude to get there. The first step is setting up a plan. You don't set out on a trip without planning it out- setting financial goals for the future is no different. It takes a plan, a roadmap of sorts.
I'm surprised by how many new people I meet who have a 401(k) plan at work and don't contribute. To top it off, many plans match your contribution up to a certain contributory percentage, and still, the person doesn't join up. So let's look at this for a moment: the employer says "if you put in a dollar I'll put in a dollar ... and you don't? In essence, you're turning down free money, or a 100% immediate return on your investment- your one dollar magically becomes two. America...what a country! And yet, many don't take advantage of their fine employers offer to give money away. Check your plan and see if you have this wonderfully generous advantage, and make sure you take them up on it. If you don't have a pension plan at work, you can set up an IRA and have the contribution deduction taken monthly from you're checking or savings account automatically. Make sure you calculate the amount correctly so you don't over-contribute ... and watch your retirement assets grow and grow. The same can be held true for saving for college, or any financial goal: have the financial institution withdraw monthly the amount from your checking or savings account automatically. In a month or two, you'll learn to live with a bit less, and you'll watch your saving each month become more. Simple? Not complicated- all it takes is a short time to check your budget for those extra couple of bucks you can do without now, and set it aside for later. Remember...once the year is done, you can't go back and save for the past 12 months- you've lost a small window of opportunity ... and we talk about Life, we need all the opportunity we can get!