Like any mother, I enjoy planning special events for my daughter. Her 10th birthday isn’t far off, so I’m already thinking about how to make this milestone special. I’m probably going to hire a professional zookeeper who will bring in snakes, alligators and other reptiles to entertain her and her friends. It will be a lot of fun and I know that my daughter will be surprised, delighted and a little scared!
This party is a few months away, so I have time to do my research. I need to be able to afford the zookeeper and his entourage, and plan accordingly so that these funds are in my budget. I want to make this event a special celebration that my daughter remembers for a long time, but I don’t want to continue paying for it for several months.
While this will be a fun and memorable event, there’s a bigger issue here for anyone who thinks about key events or milestones for their finances. Birthday parties and holiday events are fun, but all of us need to make the same commitment about our finances. We need to set goals and dates for when we will accomplish these goals.
These goals should include important, long-term events, such as when we will purchase our first home or pay off our mortgage; when we will start a college savings account for a child and when we will hit our savings goal for that account. It should also include goals for retirement planning or other special events, such as starting your own business.
Stop for a moment and think about the following:
What key financial milestones have you established for you and your family? And have you set dates to accomplish these goals? One of my financial milestones is to have my mortgage paid off by 2022. This is an important goal for me since I will have a major asset paid off and capital available to invest in other ventures.
If you have set your key milestones, are you on track to accomplish them? If not, can you adjust your budget and save more money to do so? I’m on track to pay off my mortgage by the date I’ve set. But I continually set aside funds to make additional payments or place money in an emergency account so that I don’t have to borrow or shift funds around if my car breaks down or the plumbing in the bathroom springs a leak.
Finally, if you are on track, are you celebrating your success and setting an example for your spouse or children? Even though she’s young, I speak with my daughter about money periodically. I let her know that some birthdays and events are special occasions and spending money to enjoy ourselves on these occasions is what life is all about.
If you haven’t set any financial milestone, or you need help making progress, I recommend that you do the following:
Develop your short and long-term goals. For example, deciding to buy a home or saving $25,000 for a college education are sound, long-term goals.
Develop a plan to save so that you can accomplish these objectives. To develop your plan, you need to analyze your income and expenses, and develop a budget that allows you to save for your priorities and assess your current debt and how you can pay it down quickly.