Lesson 2 - Value of Money - Part 5

Goal Planning

Our first phase in planning for our Goals is to identify the actual Goals themselves. Sounds easy enough right? Well setting a Goal needs to be much more understood than just an idea. For example Retirement is something that will most likely happen in our lifetime. I think most people would probably want to retire comfortably instead of dreaming about a brand new Ferrari and alternatively not be able to retire. Our Goals should be something that we are committed towards achieving. Buying a new Ferrari can be one of our Goals, but is it as important as our Retirement Goal?

We try to make this point so that we can cover those Goals first. I would rather know I’m going to retire comfortably before I plan on buying a Ferrari as an example. Our Goals should be the most important and necessary Goals that we can anticipate.

Most people will:

1.      Retire

2.      Fund future children’s’ education or other expenses

3.      Travel

These are some common examples of Goals that we need to plan for, and Goals for most that will take place at a later point in time. So if we use the power of interest over time, we can get a lot of help achieving our Goals.

While our Goals are important, we have to remember that our day to day living is just as important.  We will go into more detail about this in the next Lesson.

Our Next step in our Goal Planning process will be to determine how much each of these Goals will cost in Today’s dollars.