Every individual has a unique set of wealth attributes or Dimensions of Wealth that should be majorly considered when making important financial decisions. The same is true when it comes to goal-setting. Using a goals-based perspective can bring financial growth and can also focused on how your unique set of financial attributes can be used to attain your personal life goals.
Indeed, we find that if couples equally engage in a process to articulate what’s important to them and then match that with a complete understanding of their financial resources, they can build a strong financial plan with concrete action steps integrated into their daily lives. Here are the steps to that process:
Step 1: Articulate your Dreams
Goals may be suggested by advisers or family members, but those goals are never internalized by the couple as their own. Most couples will start by saying “we want to retire early” or “we want to achieve financial independence”. The real challenge is understanding what that actually looks like for you.
Step 2: Understand your Reality
In Step 2, you will evaluate all aspects of your financial life. In other words, this is where you will complete a quantitative analysis of your income and expenses, assets and liabilities, and major risks to your financial health. One of the best tools for this activity is to create a personal Net Worth statement. There are many online tools to help you articulate your assets and liabilities.
Step 3: Build a bridge
I think this may be the hardest step in the process. I find many people spend most of their time either living in the present or focusing only on the future. The more difficult place to live is where you are keenly aware of your present while also focused on your personal plan for the future. In other words, how do you use your present resources and future opportunities to move closer to a reality that looks like the vision you created in Step 1?
Step 4: Make your Dreams your Reality
Once you understand what aspects of your dreams are realistically achievable, it’s time to establish concrete action steps. This is where quantitative analysis is used to determine how much you’ll need financially and by when. Going a little practical, this found you how much you can calculate and how much you need to save to reach each of your goals.