So you have written down your basic financial goals and what you want to have in your life. Now do you know how much money you are going to require achieving those goals?
Let’s dig a little deeper to find that out…
You don’t have to know the exact prices, having an approximation will point you in the right direction. “Physical things” are simpler to price. And “Experience” goals might be more thought-provoking to place a price on. But they will make you think about your lifestyle for sure. So go for it.
These tips will help you in evaluating cost of goals you have developed and placed on your list in the past days or hours. Don’t worry about time-frames or the current value calculations as of now. Keep it easy. Just look for the price.
New automobiles, a 2nd home or vacation home, etc are a couple of instances of items that might be on the “physical things” list. The Internet will help a lot in this regard to find out these costs. Google and Amazon are most preferred resources when looking into and researching the current price of “stuff”.
Of course, holiday home won’t be listed on Amazon. You can search that into Google and might get an accurate answer. If an auto is on your list, go to the manufacturers’ internet site. Do this for all goals.
Experience goals might require a little bit more work. But you will find that on the net too. For instance, is a trip to USA on your list? Begin search with a travel site. Airlines’ web sites are also great sources for these types of information. Some sites have more specified pricing based on the deals available on airways, hotels, and car rental businesses. This would be great if you were leaving for USA in three to six months. Not the most beneficial information for future preparation. Remember to check hotel rates, rent-a-car rates, and trains or motor coaches as required. Likewise include expenses for eating, shopping, exploring, etc.
At this stage getting an approximate idea is good enough. Importantly, leave it all on the list you put together. You can always modify them later.
For figuring out the price of experience goals we will look at the example of retiring early.
Whether you’re planning retirement in the near future, or 30 years down the road, it’s never too early or late to consider what sum of money you’ll need to live on in your retirement years. A lot of financial gurus and online retirement calculators utilize set formulas for arriving at the sum of money you’ll need in retirement. A few say you’ll need 70% of your present income, and others state take your current revenue and multiple it by numbers from twelve to fifteen. In either case, those retirement calculators presume that we all have the same conditions when we retire. Naturally, that isn’t the case and there is an range of considerations to think about.
When do you wish to retire? This is crucial to know for many reasons, like how much time do you have to build your funds, and how long will you have to live off of your retirement nest egg and income. There are some more advanced calculators available that do take these issues into account. You will learn about them when we discuss this further.
What are your present living expenses and how will they shift between now and when you wish to retire? Will you pay back your mortgage, or still owe on it? Will you be able to pay back major debts like auto loans, business loans, and credit cards? What about your health?
What do you wish your retirement life-style to be? Do you plan on travel, downsizing, living in a retirement community, or doing part time work? The more flexible you are in that area, the more margins you have in the sum of money you’ll need. Lastly, what financial resources will you have available to comprise your retirement savings?
After finishing these steps you’ve an idea of where you want to go. Now it’s time to work on them from the beginning. Please get in touch with us, so we can take you from there and help you move towards financial independence.