Financial planning is all about goals. You have to sit down, look deep inside yourself, and figure out WHAT THE HELL DO I WANT. Often times, that’s the hardest part. Once you do, though, you get instant clarity. Then figuring out how to get there is easy. Let me show you.
Many sites focus on the means. A frugality blog will tell you that saving is an end into itself. You WANT to live off of 5 dollars a day. Look at how AWESOME drinking water at a bar is. Baby boomers will tell you that owning a home is the key to success, and look at that, they happen to have a McMansion they’ll give you a great deal for. Brokers will tell you anything you want to hear as long as they can charge you an asset management fee. YOU and ONLY YOU have the responsibility to look after YOUR own goals. Here’s mine.
I’m about to hit 30. That’s hard to write, but there it is. I’ve spent my 20s hustling at work and generally having a good time. I’ve saved some, but not enough. Luckily, I have no debt. I know that’s a good place to be. So, lets start big picture. What DRIVES ME.
- I like learning. Big fan of history.
- I like drinking. That response sounded a lot healthier in my head.
- I want to travel.
Next question to ask is what are MY GOALS. These are short term, mid term, and long term things I want to achieve.
- I want to see the world. I’ve read about what’s happened in the Tower of London, now I want to see it for myself.
- I like eating at new and interesting restaurants. I would never presume to call myself a foodie, my palate is nowhere near as refined as that. But I do enjoy tasting new things.
- I LOVE having a short commute to work, and I’m willing to pay for it.
Outside of those 3 things, there’s not much more I LOVE. I may like having fancy cabinets in my home, but I’m not willing to pay for that. So, now that I have my goals, lets look at my actions.
- I’m downsizing my home. My lease is up in August. I LOVE my neighborhood, but it’s a high cost of living area. Including utilities, I’m paying just north of $2,000 per month. I’m looking at units that are MASSIVE downgrades in term of space and quality, but in my same neighborhood. I’m willing to go from a 1 bedroom to a studio, and even let go of my in-unit washer/dryer. Any savings will go to a travel fund.
- I’m taking inventory of every expense and asking myself “do I really need this”. I’m cutting my cable subscription and will subsist on Netflix and Amazon Prime videos. I tried cancelling my New York Times subscription, but they offered to halve the price, which…. touche NYTimes.
- I’m making a point of brown bagging lunch as much as I can. I have an unhealthy habit of eating out during lunch a lot. I hate preparing meals in the morning, but I gotta keep reminding myself that every meal I bring is $4 bucks towards a nice restaurant meal on the weekend.
- I’m upping my retirement savings. A lot. Here’s my rationale: travel is expensive. If I end up retiring (God know what could happen over the next 25 years), that’s what I’ll probably be doing with my free time. So I need to be able to finance that, and social security alone isn’t going to cut it. Social security and my pension are both unable to cut it. So I’ll have to crank up my TSP (the federal government’s version of a 401K) to make sure I can continue to do the same fun stuff I plan to do now.
Once you have your goals lined out, making the difficult choices is a lot easier. I’ve scheduled a trip to Paris for October, and having that goal in my mind makes gutting my spending slightly easier. Not easy, mind you. I am definitely going to miss my washer/dryer.