Vision for Financial Success

If you are like me (I would wager most are) then you have dreams of things you would like to do or accomplish in the future that require money. I would imagine that many of those bucket list items require more than just a few dollars saved up to accomplish. I find that often we leave these bucket list items stagnant. They can end up being more like daydreams than realizable goals. I would like to suggest as long as these items are more like daydreams then realizable outcomes they probably will not happen.

Having a vision (clear direction of where you want to go) with your finances will be the first step in creating a means to turn those daydreams into something that could happen. Once you have a vision for your finances than you can begin to establish a financial structure to make it come to pass. Profitable companies always have a strong vision and mission statement. It works for an individual or family as well. Once a company establishes a vision they are able to create a mission and objectives that work towards attaining the vision. The same can be said for an individual with financial vision. While it doesn’t have to be as structured as a company, with a vision in mind the individual can begin to create objectives they want to meet that gives a structure and lens with which they can make financial decisions.

When establishing a vision for your financial success ultimately it should be what makes you happy. Comparison to other individual’s finances is a trap. It can lead you to try to keep up with the Jones’ instead pursuing objectives that fancy what will make you happy.

In terms of practicality – establishing a vision for your finances most likely will mean establishing where you would like to be financially 1 year from now, 5 years from now, 10 years from now, and so on – all the way up into retirement. This can include how much you would like to have saved/invested during this time frame, big purchases that you would like to make, how much debt you want to pay down, where you want to be living, what would you like the size of your family be, etc. The further out you go it probably will not be as precise as where you want to be one year from now and that is okay!

It is normal to change these items as you grow and move along in life. Some of the items on your list can be items that have factors that are outside of your control such as the example I used above of determining what size you would like your family to be at any point in time. Items like this should be listed so that you can determine more controllable objectives such as home purchases, and the standard of living you will want to have reached through a combination of income level, expense control and savings. This makes it possible for you to be where you want to be financially in the event that the less controllable things occur like the desired size of your family.

Now, let’s talk practically how to achieve the vision you have laid out! For each item you have listed as part of your vision, take time write out the practical objectives/goals you will need to accomplish to reach each item you have listed. There will be certain goals that apply to each statement and can just be written as key general goals to obtain financial success. For example – breaking the cycle of living paycheck to paycheck will be key reaching any item that you have written down. Having an emergency fund equaling 3 to 6 month’s salary is another key objective to meet that will be key to reaching other objectives written down. When you are working through building you goals/objectives check out this article that I wrote on goal-setting.

Giving your money vision will change how you view every transaction you make. In a way you are giving purpose to your financial decisions -spending and saving because they are now working towards your vision. It doesn’t mean you have to refrain from spending money or that you never get to have fun anymore it just means that you have become wiser when you do spend and don’t have to deal with near as much buyer’s remorse later. Rather you can give yourself the freedom to spend money within your plan knowing it will not keep you from attaining all that you are planning to accomplish. Finally, it means you are now on a track to reach your version of financial success.

 

4 Benefits to Having a Financial Plan

Money can be a taboo topic, yet, we all think about the need to have a plan for our money. Few seem to make it happen. In a recent 2018 study by an investment company, Charles Schwab, it was discovered that 3 in 5 people are living paycheck and only 1 and 4 people have a written financial plan. I would suggest it is not surprising to discover that more than 50% of people are living paycheck to paycheck when only 25% have a plan. Having a financial plan is an absolute game changer. Here are 4 benefits.

1) Maximize the use of your income and accumulate wealth.

When you have a good plan you able make your income go farther, increase your wealth and over time make your money work for you. This happens through breaking the paycheck to paycheck cycle and paying yourself through savings and investing.

2) Control your expenses.

When you have a good plan it gives you a lens which through you can make prudent spending and saving decisions. Some might say it means that it removes the opportunity for fun. I would argue just the opposite. I would argue that controlling you expenses enables fun without financial disaster, buyer’s remorse later, and anxiety that comes from a low bank account.

Living below your means by controlling your expenses will produce a much greater financial reward in the years come.

3) Reach Your Version of Financial Success.

Having a plan will be the only way you reach financial success. Each and every individual’s version of Financial Success is going to be different. However, it is important to know what you envision financial success looking like for you and then make it happen! Make sure it is your vision and no one else. If it is not yours, it will not make you happy.

4) For those that desire: the empowerment to give back. 

It can be hard to give back financially to your community, preferred charitable non-profit organization, or religious entity of choice without a plan that is keeping you thriving financially. Many people want to give back, but do not have the means to do so. Planning now will enable you to give back now and give back even more later!

If you you would like help building a plan that helps you reach financial success visit our website at wku.edu/cfs and fill out our become a client form! We look forward to coming alongside you in your journey to financial success!

Financial Wellness Checklist for Graduating Seniors

It is almost graduation! While graduation is an exciting time, it can also be overwhelming to be thrown out into the “real world”. Getting your financial life in order can help you to feel more prepared for the next chapter in your life. Although this post is geared toward graduating seniors, it is helpful for anyone.

I also want to add that our counselors are here for you. Visit us before graduation and let us help you start post-grad life off on the right foot!

I have compiled a neat checklist for you to follow along with. This list is not exhaustive, but is a great start!

Graduating Senior Financial Checklist:

  • Create an online log-in with your student loan servicer
  • Set-up an appropriate repayment plan for your student loans
  • Open a checking account with no minimum balance and no monthly fees
  • Open a high-yield savings account to store emergency fund and other intermediate-term savings
  • Perform a credit well check- consider opening a credit card if you do not already have one
  • Read your employee benefits- if you are starting your career, spend some time studying your new benefits
  • Create a written budget
  • Start saving for retirement- utilize your employer match if you are starting your career, or consider opening a Roth IRA
  • Write out your short-term, intermediate-term, and long-term financial goals

The WKU Center for Financial Success has resources explaining how to accomplish these items here:

https://www.wku.edu/cfs/resourceshome.php

Our counselors can also walk you through this checklist and have you leaving WKU empowered and excited for the road ahead!

Visit our website to set up an appointment:

https://www.wku.edu/cfs/become-a-client.php

Goal-Setting is like the One-Two Punch

The “One-two punch” is one of the first moves taught to a boxer in training because it tends to be easy and effective. It consists of quick jab with one hand followed by a cross punch (a much more potent punch than a jab) from the other hand. Secondly, this is a fundamental technique to build upon more complex techniques in the boxing world. As a former athlete this analogy resonates with me, because I have understood from experience the importance of the developing the fundamentals first.

Goal-setting in financial success is just that – the fundamental piece that sets you up to take on every financial situation. Successful goal setting is a multi-step process. People often say their goals are tasks like retiring with $1 million, visiting Paris, swimming with dolphins, saving for a new car, or starting an emergency fund. I would like to suggest that these are dreams not goals, and with a little bit of work they can become realizable goals. Just like the one-two punch doesn’t end with the first jab because the first jab doesn’t accomplish the job but rather sets up you for the second blow in the same way dreaming of what you want sets you up for the opportunity to create incredible goals. At the Center for Financial success we strongly encourage forming specific, measurable, attainable, realistic, and timely goals. Specific goals have a much better chance at being achieved then a vague goal. For example, if you want to go on a spring break trip and leave your goal at saying, “I want to go somewhere for spring break” you will be much less likely to actually achieve that goal then if you state, “For spring break 2019, I would like to go to Destin, Florida for 5 days and stay at a beach-side condo that costs $100 a night.”

Measuring a goal is the point where you set forth concrete criteria to see if you are staying on track to attain your goal. When you have established such criteria and then you use the measure to evaluate if you are on pace to achieve a goal it can create a sense of accomplishment that encourages you to keep pressing on towards your goal. Let’s assume you have ten months to save $1,000 for the trip to Destin. This would mean you need to save $100 a month therefore you can measure the goal by looking at your savings at the end of each month and see if you have save another $100 dollars.

The final three steps are attainable, realistic, and timely. This part involves examining your time frame for achieving your goal and determining if the time frame is realistic and attainable. For example, if spring break is 10 months away and costs $1,000, but you are in a position where you are only able to put $50 a month towards this goal then it is not attainable. At this point you should not ditch the goal, but rather determine how to proceed. Should you adjust your time frame? Maybe waiting until the fall would make more sense or you might determine that you have enough time to pick up an extra side job to stay on the same time frame.

When making realistic goals, your goals need to be personal to you. It is easy to build goals based off what everyone else is doing, but those same goals may not truly align with what you define as success and a full life. Do not be tempted to live someone else’s dream. Figure out your dreams, make them goals and write down a plan to accomplish them.

There is little you won’t be able to accomplish when you have written goals that you actively work towards and track your progress. Finally, it is tempting in the goal-setting process to make goals that are easily achieved and that never challenge you to reach them. I caution this because I am not convinced that you will be able to achieve the dreams that you will really want achieve. Do not let the fear of failure keep you from achieving tough goals!

At the WKU Center for Financial Success we are in the business of helping you make your goals a reality. Consider scheduling a free appointment with one of our Peer Financial Counselors. It is easy, just visit our website and fill out a form that takes 30 seconds and you could be on your journey to achieving your dreams!

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