Making Sense of Your Finances - Part 3
By Loral Langemeier
Knowing What You Need To Achieve Your Goals
Now you have a clear understanding of where your money is going each month and how much you currently have in assets. The next step is to determine how much you will need to save each month in order to reach the financial goals that you identified earlier.
Your Goal Achieving Investment Plan
By completing this exercise you can begin to estimate the monthly investment requirement for each of your financial goals.
1.What is the goal?
2. Length of time until you will need to reach your goal?
3. Estimated cost of your goal?
4. Choose a rate of return that you can realistically expect to receive on your investment?
Multiply line 3 by line 4. This will give you a rough estimate of what your monthly investment contribution will need to be in order to reach the financial goal you outlined on line 1.
- I will put my daughter through college. I will fully cover her tuition and books, as well as provide a monthly stipend for her living expenses (rent, auto, insurance, food.)
- I have 15 years to achieve this goal.
- I will need a minimum of $150,000 to achieve this goal.
- $150,000 times .0034 (6% rate of return for 15 years) = $510.
Once you have completed the exercise above for each of your financial goals complete the following exercise on a separate sheet of paper.
Goal #1 - Monthly Investment Amount - Criteria
Goal #2 - Monthly Investment Amount - Criteria
Goal #3 - Monthly Investment Amount - Criteria
Example from above:
In order to achieve my goal of having $150,000 available in 15 years to put my daughter through college, I will need to invest $510 each month into my daughters' college fund at a minimum of a 6% rate of return.
Loral Langemeier draws from her personal experience when guiding others toward prosperity. Loral built her first business in college and soon after started establishing a multi-million-dollar portfolio of properties and stocks. A passionate advocate of helping women master money management, she offers straightforward principles and concepts for achieving financial stability and independence.