Today’s decisions could cost BIG TIME tomorrow (PART 2)

Editor’s Note: We have reprinted the Lynn’s November article below for the convenience of readers who may like to have Part 1.

Best Wishes for 2014! In November (please see below) I discussed the “spend versus save” decision which we face daily, and how much impact our current decisions have on our future financial position. Sure, it’s difficult to think about a distant future plan, when it is so convenient to get something you want today. This is why so many people fail to set realistic goals, and it’s a problem which seems to be getting worse with each generation. The first thing you need to know is what you are saving for. Therefore, start by setting some measurable financial goals. In other words, you can’t measure a future need if you haven’t defined what that need shall be.

Once you’ve made your calculations, it’s time to decide on how and how much you should invest to reach your objectives. It is important to factor in things such as compound growth, taxes and inflation in order to give you a realistic picture. The next step is where things become even more complex:

  • What happens if the amount you originally thought was adequate is no longer enough because your purchasing power has decreased due to the cost of living which has risen between when you set the goal and when it comes time for you to have reached the goal.
  • What if your choices of investments do not provide the levels of returns you will one day need –because the returns have either been reduced by market volatility or an unexpected economic downturn?
  • What if your income – and thus, your ability to save – is affected by ill health, a workplace accident, a sudden unexpected expense, or even job loss?

Don’t let these obstacles deter you – there are solutions to all these dilemmas, ranging from an effective investment diversification strategy to insurance coverage that will protect you, your family, your income and your estate.

So while the creation of the plan is important, the implementation of the steps leading up to all goals, both short and long term, is equally critical. Regularly assess your plan – checking investment performance, changes in your expense levels and any other factors that can impact your level or years of income during retirement – and revise as required.

Yes, comprehensive financial planning is complex – and also vital. Make the right decisions today and for your future by talking to a professional financial planner for guidance. With the New Year right around the corner, make a resolution to get planning.

Related Posts