Setting financial goals is critical if you want achieve specific financial milestones in your life. In fact, a failure or inability to set goals, increases the odds that you will end up like most people at retirement - depending primarily on Social Security for your welfare.
In an ideal world, you would start to set your financial goals at the earliest age possible because the sooner you start, the easier time you'll have of it. For instance, assume that you invest 5 thousand dollars in your 401k account at age twenty. At about seven percent interest per year, you will have over a hundred thousand dollars when you reach sixty-five years of age. Without adding another dollar to your investment, compound interest adds over ninety thousand dollars to your account.
However, if you place that $5,000 in the same account at age 40, you'll only end up with about $30,000. In this instance, time is money. The sooner you can start investing in your future, the better off you'll be in the long run.
This is also true for just about most other financial goals that you have. Whether you are looking to save money for a down payment on a new house, set aside a college fund for your children, or save money for a new car - the sooner you set your financial goal and start to save, the better.
The best way to decide on your financial goals is to do it as a family. Get the family together, sit down with them, and talk about where you see yourself in 5, 10, 15 years and so on. Together, decide what is important to you, determine when you need it, decide how much money you will need each month to save towards obtaining it, and set a place in your budget to take out that amount of money for your goals.
The process will go even smoother if you can somehow manage to save the money before you get your hands on it by having the money deducted directly from your paycheck and placed in either your bank account or some other financial account at your disposal.
If you don't set a financial goal, you are basically flying blind. And if you don't set a budget, you will find your money seamlessly slipping out of your pocket leaving you without the financial resources just when you most in need of them.
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