The first thing I do at my office each morning is “power up” my computer. This tool has enormous capabilities that add instant benefits and make my life more productive. Unless I use it, however, it’s just a dormant piece of equipment taking up space in my life. As a financial planner, I can’t help but think of all the significant ways we can Power Up our financial lives! I look forward to sharing this series of Power Up financial principles that will do just that: add instant benefits and extra capabilities to things that would otherwise lie dormant in our lives.
The beginning of a new year is the perfect time to focus on our foundation: planning and goal-setting. My husband and I spend time toward the end of each year reviewing the past year and evaluating areas that need our intentional focus in the year ahead. We want to ensure we are working together instead of just hoping things will work out. The added bonus of this time together is a healthier marriage. We explore our perspectives, work through differences, evaluate the attainment of our goals, and make adjustments as needed for the year ahead. If you are single, this process is equally essential for you as you prepare for your long-term future as well.
Life has a way of presenting interesting twists and turns so for the inevitable curve balls that come your way, try this exercise. Draw two circles and label one Control and one Concern. There are many things over which you have some control and plenty over which you have none! What you cannot control, place in the concern circle, do your best to address the issue, and then trust God for the outcome. What is within your control—therein lies the power of planning! Here are some considerations to get you started on making purpose-filled decisions that significantly impact your future.
- Debt: How much is OK? How can we strategically reduce our debt?
- Savings: What should we be saving for? How much, how often, and how strategically should we be saving?
- Family: What areas should we better prepare for our family’s needs (education, medical, clothing, insurance coverage, etc.)? Do we need to physically or financially prepare for aging parents or other dependent family members? What can we do now to minimize the impact this might have on our family later?
- Household: What kind of home should we rent or buy? What’s the best mortgage for our needs? What additional short- and long-term maintenance and improvement needs should we consider?
- Retirement: When do we plan to retire? What do we plan to retire to? How should we save and invest? Are we maximizing all the tools available to us?
- Lifestyle: How much should we allocate for discretionary expenses like entertainment, vacation, special events, etc.?
- Giving: How much would we like to give? To whom do we want to give? How can we maximize our giving?
This is by no means a comprehensive list, but is a great starting point to begin your goal setting. Draw your two circles, address each category, and formulate a plan for what is within your control. Focusing on a handful of well-thought-out strategic goals provides four key benefits: clarity to your thinking, meaningful direction for decisions, motivation to stick with the plan and the personal satisfaction of seeing your dreams become reality. Meaningful life planning is a Power Up tool that can get your new year off to the right start.
Thompson is a certified financial planner and founder of Strategic Financial Solutions Inc. A frequent speaker in financial topics and mentor for financial professionals, Thompson also serves on the board of directors for Kingdom Advisors.