The first question I ask during a financial coaching session is “what are your financial goals?” Instead of responding with concrete financial goals, the answers generally relate to a particular problem that they’re currently facing that’s preventing them from getting what they want. It has been said that the average person spends more time planning what they’re going to wear to work the next day then they do planning their financial future.
Most of us never took the time to identify specific financial goals and establish time frames and a game plan for when and how we’ll accomplish our goals. We simply get the idea that we desire a particular thing whether it be the latest gadget, latest fad, new home, new car, and/or college education then impulsively pursue it. Only when we are thwarted in our pursuit to obtain the things we want or when it’s the day before it’s time to deal with serious financial decisions do we begin to seek information or professional advice that will help us make sound decisions. The information and advice that we seek is very specific. How do I get out of debt? What do I need to do in order to qualify for a mortgage, car, business, or student loan? How do I avoid bankruptcy or foreclosure? How do I get this account off my credit report? What is the best way to save for retirement?
True financial planning is holistic. When we address one financial subject without considering the impact on the entire financial picture, we’re left exposed to more and more financial breakdowns leaving us to wonder why the little man can’t get ahead. By not identifying specific goals, prioritizing our goals and laying down a concrete plan detailing how to accomplish our goals. Many of us unknowingly have created competing goals—all of which is tugging at our money.
A financial goal is a desire, want or need that has a price tag attached to it. When you spend money, you have in effect fulfilled a financial goal. You obtained something you desired, wanted or needed that cost you money. Each purchase we make hinders our ability to fulfill another financial goal because our purchase reduced the available money on hand. Money is finite. There’s only so much that will flow through our hands during our lifetime.
As long as God continues to give us breath we’ll go through various stages in life that will require major financial commitments. From starting a family to building a nest egg for retirement to leaving a legacy that will provide economic support to those who depend on us financially after our death. Unfortunately too many of us live in the moment. We’re only concerned about what’s in our face right now. We tend to deal with life pending realities and life unforeseen challenges as they present themselves in the flesh.
I hold belief that you don’t have to have a fortune to start building one. I’m thoroughly convinced that with comprehensive financial planning, anyone with an average household income can become completely debt free, with money in the bank, and have a million dollar net worth by the time they retire. The stark reality however is:
•70 percent of Americans are living paycheck to paycheck
•85 percent of Americans have a true net worth of less than $250
•62 percent of Americans say money is their biggest problem
•41 percent of American households do not have an emergency fund
•Money problems is the primary cause of fights between married couples
•51percent of marriages end in divorce—of those divorces 80 percent cite financial problems as the leading cause
•60 percent of college students leave college with student loans and credit card debt
•Less then 2 percent of Americans own their home independent of a mortgage
•96 percent of those 65 and older retire or die broke
Why are so many people struggling financially in America—the greatest, most prosperous country in the world? I believe it’s because we ignore one or more of “The four P’s to accomplishing your financial dreams—Priority, Patience, Planning, and Persistence.
Prioritization—When you prioritize your goals. You establish the matter of importance. For example if you want a new car, a new house or you want to save for retirement. You list these goals in order of importance for pursuing all three at one time will minimize or void the possibility of doing the other. The secret to winning financially is the power of prioritization and FOCUS—Following One Course Until Successful.
Patience—Patience is a financial virtue. As you began to prioritize you financial goals, you’ll learn that you cannot afford everything right now and that some things just have to wait. Being able to delay purchases will help you avoid mountains of debt and interest charges.
Planning—No body plains to fail, they just fail to plan is an often quoted phrase in the financial industry. I advise that we heed the advice and plan since most of us have witness firsthand what the lack of planning has gotten us no where—(Broken Dreams)
Persistence—Aspiring to one day be debt free, properly insured, having a fully funding emergency fund, saving money to purchase big ticket-items, funding the children’s college fund and building a respectable retirement nest egg is not an easy road to travel. The temptation of wanting everything right now will never go away. In order to fulfill your dreams you have to persistently prioritize your goals, persistently plan and persistently be patient despite the various challenges, temptations and setbacks you’ll experience.
(Mortgage and Money Coach Damon Carr is owner of ACE Financial. Damon can be reached at 412-856-1183)
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