Several years ago, I read a self-help book that promised to help me manage money better. I do not remember much about the book, not even the title. I do remember one exercise that was very useful.
I was supposed to create what is now commonly known as a “bucket list.” I should list all of the things I wanted to do during my lifetime. It did not matter how long the list was. When finished with the list, I should then review it and think about how a change in money management practices could help me achieve those goals. That would help me to set a budget, make more responsible spending decisions, et cetera. After all, you need money to pay for most of the things you want to do in life.
I found the exercise to be very enlightening. To my surprise, I saw that most of the items related to travel. I realized that I needed to do a better job at maintaining an emergency fund and set a formal budget for travel. I had been tapping the emergency fund whenever I wanted to visit some place new, which is a bad idea. I setup a direct debit from my checking to my savings account so that savings could be automatic. This act created a formal budget for both emergency savings and travel.
Today’s list is very different. My revised list includes completing several projects around the house, paying off my mortgage a few years early, donating more money to my favorite charity, buying a nice road bike, and squirreling away more money for unexpected expenses and retirement. Sure, there are a few personal goals that are not tied to money; I am not completely shallow. In balance, the list is much more practical than years ago, when I wanted to see the world.
I still do not want to wake up one day at age 80 and realize all I ever did was work, work, work. The list can help me stay focused on important things and achieve some of my goals. Hopefully, I can strike the right balance between the practical (saving for retirement) and the fun (buying that road bike). I encourage you to take some time to create your own list.
Then, please share your list with your financial advisor. Goals change over time, so he or she should be aware of what you want from life. Together, you can develop a financial plan to direct your savings in a manner that will bring you closer to achieving your goals.
Cristy Freeman, AAMS
Senior Operations Associate