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Five steps to achieving your financial goals
What do you want to do now, or next year, or five or 10 years down the road? This is the time of year when people step back and consider where they stand and how close they are to achieving long-held goals. No matter what your objectives, there’s no doubt that a sound financial plan will put you in a better position to achieve them, according to the Minnesota Society of CPAs.
Make a list.
When you write down your dreams on paper, you’re one step closer to making them a reality. In addition to short-term goals, such as purchasing a car or starting a savings plan, don’t be afraid to include more ambitious ideas, such as a new home purchase. Once you’ve made your list, try to construct a realistic timeline for achieving each one. While there may be set dates when you’ll need college tuition money or retirement savings, other goals such as the purchase of a new home may not have clear deadlines. If, for example, you give careful consideration to whether it might be realistic for you to take on a mortgage in five years, it’s easier to create a budget that will help you make that dream come true.
Plan to save.
If you don’t already have a monthly budget, now’s the time to determine how much money you have to spend each month, how much is required to cover the necessities and what’s left over. Then decide what you can save every month toward your goals. If the amount you need to meet your objectives is too high, reconsider your timeline or your goals. You’re more likely to feel like your goals are impossible to reach and potentially give up, if your savings plan isn’t realistic.
You’re not going to be able to achieve all your goals at once, so prioritize your list based on each item’s importance and your timeline. If cutting your credit card balances is on your list, it should be a high priority. That way you can stop spending money on interest payments. Remember, some goals that feel far away may still need to be a top priority. Although retirement may be a long way off, for instance, the earlier you set up a tax-advantaged retirement account, the larger your nest egg will be later on.
Take the first step.
Once you have specific priorities, consider what you can do now and in the future to achieve each one. If you want to save for a child’s college tuition, for example, set up a 529 or other tax-advantaged education saving account. If retirement is on your mind, look into your company’s 401(k) plan or determine whether an IRA suits your needs.
In other cases, it may help to clarify what you really need. If an automobile purchase is on your agenda, would it be smarter to aim for a used car in good condition rather than a new car that might bust your budget? If so, that goal just got a little easier to reach.
To help you with your planning, the American Institute of CPAs has created a great goal-setting tool, YOU Save, which consumers can use to plot their course towards any number of objectives. YOU Save is just one of the many resources available from the AICPA’s Feed the Pig campaign to help enhance your financial stability. You can also find resources at the MNCPA website.
Your local CPA can help.
All it takes is some thoughtful planning to make many of your financial dreams a reality. If you have questions about the steps discussed here, or about any financial issues, be sure to turn to your local CPA. Don’t have a CPA? Visit www.mncpa.org/referral to find a CPA in your area.