Transcript of video:
When we ask clients about their financial goals, most of their responses center on retiring by a certain age, funding college educations, and similar desires.
While these are all worthy objectives, they are not financial goals – they’re lifestyle goals. So, what is the difference? Financial goals are an expression of what must occur in money terms to achieve a certain lifestyle goal.
Here’s an example:
Funding 2/3 of a newborn’s college education (the lifestyle goal) might require a financial goal to save $100,000 over the next 18 years. Assuming a 5% return, saving $285 per month starting today is the necessary action to fund the goal.
There’s an old saying that a dream is a goal without a plan. We’re unlikely to achieve a lifestyle goal without setting corresponding financial goals, which in turn guide our actions. Ultimately, actions, not words, stand the best chance of turning dreams into achievements.