This is the third part of a series on setting financial goals with your spouse. Our first part helped you figure out what’s important to you and our second part talked about the importance of defining goals that are specific and measurable.
This article will be about how to plan your steps so you can move toward your goal with focus.
There’s an excellent time and task management book called Getting Things Done by David Allen. The overarching idea in the book is that the best way to tackle a project is to break it down into actionable steps.
This advice is perfect when it comes to setting financial goals. When you look at where you want your finances to be, sit down and think about what it will take to get there.
You will most likely need to make some changes in your spending and saving, and you might need to do some administrative tasks to start the ball rolling. I recommend separating these two parts of your planning by making one list that only has tasks. If your goal is to start saving for your children’s college expenses in a 529 plan, your task list might have the following:
- Look at 529 Plan offerings from your state, Charles Schwab, Vanguard, and Fidelity. Order hard copies of plans in order to look them over with your partner.
- Decide which plan fits your needs best based on minimum investments, amounts allowed to be invested, and funds offered by the plan.
- Sign up for plan and decide on investments use in the plan.
If you don’t know what to do for the second and third steps, look for resources on the internet. One good site for college savings is (naturally) savingforcollege.com.
Many couples don’t even begin saving for a future goal because they get don’t know what to do. It’s times like these that you may want to seek the advice of a fee-only financial planner. (More on finding a financial planner at the bottom of this email.) Don’t let yourself get tripped up because you don’t know the best way to split savings between stocks and bonds.
Moving Beyond Administrative Stuff
As I mentioned earlier, besides the administrative-type stuff required to plan for a financial goal you are going to need to decide how to find the money to put toward the goal.
Right now, all of your income is going somewhere. Even if you’re living well below your means, income is being placed into some sort of savings.
If you’re already living below your means and you’ve been saving into an emergency fund that has at least five or six months of your living expenses saved up in it, this step may be as simple as setting up an automatic deposit into the chosen account (in this case the 529).
If you are barely making ends meet, there are a couple of ways to go about examining your spending.
First, there are three levels of spending that you can look at reducing. First are the incidental expenses, often called discretionary expenses. Things that fall into this category are frequent trips to the local coffee shop or dinners out.
The next level of spending to examine is your essential-but-easy-to-address expenses. Clipping coupons for groceries or examining your cell phone expenses fits into this area. Some things require a phone call to a service provider (cable, cell phone, etc.) and others require an ongoing effort (such as clipping coupons).
The final (and most often overlooked) step is to to take a deep look at your lifestyle and see if your lifetsyle, income, and goals are mutually compatible.
The area this shows most is in housing and where we choose to live. Can you afford to live in your city, with the income your family has, and fund your goals? For some, the answer is that they can’t.
I’m not saying you should immediately pack and call the movers for a move to another state, but it is something worth thinking about.
Earning More
The final idea to look at is whether you or your spouse can earn more money. Whether it’s a second job or a part-time home business or a change to a different industry, are there things you can do to earn more?
Wrapping Things Up
Goal setting often feels tough because we don’t break things down into small steps. As you talk with your partner about what’s important to you and how to get there, keep in mind some of the things Dr. Dilley mentioned in the podcast on keeping financial harmony with your spouse (here’s a link to the entry with the podcast link).
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