Where to Start Your Lifestyle Plan
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Where to Start Your Lifestyle Plan
Where to start
The first step in lifestyle financial planning is to make a list of your desires, dreams, strengths, needs, and goals. Then identify the financial goals associated with them. It might be helpful to use a written questionnaire to organize your thoughts. Questions such as "Where would I like to live?" "What kind of car would I like to drive?" "What kind of clothes do I like to wear?" "Where would I like to work?" and "What do I like to do for entertainment and recreation?" can all be helpful in pinpointing the lifestyle for which you need to plan. The answers to questions like these will help you define and set reasonable financial goals.
Things To Know
- The first step is to make a list of your desires, dreams, strengths, needs, and goals.
- Have mileposts along the way to see how well you are progressing.
Where money comes in
The lifestyle plan includes allotting assets and income toward the goals you strive to achieve. Money can come from earned income from work, or earnings on your investments. As in all financial planning, you must guard against inflation, taxes, and risk of loss of income due to death, disability, or legal action. You must also consider how to invest savings to help maximize growth while minimizing risk of investment loss over the investment time horizon to your goal.
You can begin to implement your plan when you start to earn money and save for your goals. Your goals can be short-term, intermediate-term, or long-term. You should select investments according to the risk and return you need in order to achieve your goals. Generally, short-term goals require the safest investments while long-term goals can be invested more aggressively.
Measure your progress as you go along
But you’re not done yet. You should have mileposts along the way to see how well you are progressing. When you made your plan, you decided how much money you would need at a specific point in time in order to achieve your financial goal. A milepost measures how far along the route you are to achieving your financial goals. In some instances, you will be ahead of schedule while in others you may be behind schedule. Or your goals may change. Be prepared to stop and reevaluate your plans and change direction if necessary. It’s your life, so live it the way that best meets your desires, dreams, strengths, needs, and goals.