What does succeeding financially mean to you?
Have you ever asked yourself that question? I think it’s a highly subjective thing. What financial success looks like for Warren Buffett may be very different from yours.
Is it a question worth asking? I think it is.
Odds are, you want to be financially successful. But if you don’t know what that means, how will you know if you get there?
My goal here is to help you get clear on what succeeding financially means to you, and then create a plan for making it happen.
In my role as a financial advisor, I’ve been helping people to become financially successful for over 20 years. I’m honored to be named to Investopedia’s list of the top 100 financial advisors many years running. Whatever your ideas of success are, I can help you realize them.
Here’s what we’ll cover:
- What does succeeding financially mean to you?
- Making your plan
- Common objectives
Let’s get started.
What does succeeding financially mean to you?
“Comparison is the thief of joy.” – Teddy Roosevelt
We can’t help but compare ourselves to others. It used to be our neighbors, and now because of social media, it’s everyone. But you and I only have one opportunity at life, and it’s better to live on our terms than somebody else’s. Because of that, I want to help you explore and get crystal clear on what financial success means to you.
I’ll re-ask my initial question, “What does succeeding financially mean to you?” Get a pen and paper and start writing. Don’t judge what comes out, just write.
Maybe you want to live in a penthouse in Manhattan and drive a Ferrari. Perhaps you’d love to live in Paris. Or maybe you’d just like to be debt-free and live in one of those cool camper vans.
To help get you thinking, follow these prompts:
- What do you do for a living?
- How much money do you earn?
- What’s your net worth?
- What do you invest in?
- Where do you live?
- What kind of house do you have?
- How often do you think about money?
- What do you do for fun?
- Where do you vacation?
- Do you donate money to charity?
The skies are the limit. Why not dream big?
If you’d like to dig deeper into goal setting, you can access our Goals Course for free.
Making your plan
While dreams aren’t completely worthless without a plan of action, they’re pretty worthless. So let’s make a plan for helping you reach whatever your desired level of success is.
We tend to overcomplicate financial planning. At its core, it’s a fairly simple process. You start by thinking about where you want to go (your goals), look at where you currently are, then figure out how to close the gap.
Make a list of your desires, and write down how much, or what it will take to bring them to fruition. Next, create an accounting of your current financial situation (assets, liabilities, income, expenses). Now, it’s time to close the gap.
You may be able to achieve some of your goals quickly, while others may take a lot longer. Some goals may only need small changes, while others may require big ones.
As you’re putting your plans together, check out one of our Certified Partners, OnTrajectory. They offer a free trial of their software which you can use to put concrete numbers to your plans.
Common objectives
To help you in your process, I want to go through five common financial objectives.
Living debt free
Debt is a burden for many Americans. From my perspective, if you’re in debt, getting out should be your #1 objective. The first step is to create a spreadsheet of all your debts, the interest rates, minimum monthly payments, and the company. Once you know how much debt you have, you can plan for how long it will take to pay off.
In order to break free from living paycheck-to-paycheck, you may need to figure out how to earn more money, or how to live on less. You can do this by revisiting your budget and carefully reviewing your cash flow. Where are there opportunities to make cuts or adjustments?
From there, you’ll know how much money you can afford to put towards your credit card debt on a monthly basis. That will inform how long it will take to get your debt paid off.
To help you pay off your credit card debt, you can access our Get Out of Debt course for free.
Buying a home
The first step to buying a home is to get your credit score above 620. That will allow you to qualify for a conventional loan. Next, determine the value of the home you’d like to buy. Even though it’s possible to buy a home without a big down payment, it’s wise to plan for at least 10% down.
If you’ve decided you’re going to buy a $500,000 home, you need to save $50,000 for a down payment. Next, figure out how much you can save towards that goal on a monthly basis. Finally, determine how many months it will take you to get to $50,000. If you save $2,000 a month, it will take you just over two years.
If you’d like to dig deeper in this, check out our Buying Your Next House course.
Becoming an investor
Perhaps it’s your desire to become a rich and successful investor. The first step is to determine what type of investor you are (conservative, moderate, or aggressive). You figure that out by completing a risk tolerance profile. That profile will also give you the appropriate asset allocation (mix of investments).
From there, you’ll figure out how much you can afford to invest on a monthly basis. Next you’ll think about your investing time horizon (how long you have to invest) which is normally broken out into short-term (zero to three years), mid-term (three to 10 years), and long-term (10+ years).
From there, you’ll choose the proper accounts:
Short-term: Checking, savings, money market accounts
Mid-term: Taxable brokerage accounts
Long-term: Taxable brokerage accounts and qualified accounts (IRAs, Roth IRAs, 401(k)s)
Again, our Certified Partner OnTrajectory can help you put solid numbers to your desires.
Another one of our Certified Partners, M1 Finance, is a great platform for helping you invest.
Finally, check out our Saving and Investing course and our Retire Happily course.
Saving for college costs
Helping your kids graduate from school without no debt is an amazing goal. That being said, please make sure you’re on track to meet your financial goals and objectives before you start saving for your kid’s college.
The first step is to determine the total amount you’d like to provide to them. Next, figure out how long you have to save (if your child is three, you’ve got 15 years). Based on that information, you’ll know how much you’ll need to be saving every month.
There are a lot of accounts you can use:
- 529 plans are accounts designed specifically for paying the cost of education. Check out SavingForCollege.com for detailed information on all things 529 plans and college savings
- Taxable brokerage accounts can be used
- Roth IRAs can also be used
On a side note, if you’d like to help your kids be good with money, check out our Teaching Kids about Money course.
Closing and resources
Hopefully this has been helpful to you. One of the keys to succeeding financially is to start thinking of yourself as the CEO of your financial life. While you don’t need to do everything (think filing your taxes), you need to take an active interest in everything. Going through a proper goal-setting process will help you set your intention and get on the right track.
You’re capable of succeeding financially. Get to work.
If you’d like some additional help, check out our Academy Coaching program.
OnTrajectory is a helpful tool in modeling your financial future.
M1 Finance is a great and affordable resource for opening important financial accounts.
SavingForCollege.com will help answer your college savings questions.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
Connect with one of our Certified Partners to get any question answered.
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