Like many of us, I have been guilty of saying “someday” to my dreams and endangering my financial well-being.
You’ll know that you’re doing this too, if you:
Don’t have an emergency fund.Have consumer debt.Dream of coming into money so you can finally reach your financial goals.Dreams can be the spark for getting your financial life in order, but being able to pursue them requires building a solid foundation, which includes paying off debt and building an emergency fund.
Today, I’ll discuss how to organize your dreams and create a path to fulfilling them.
Organize your dreams in this order:
Fulfillment: living a meaningful life.Financial well-being: financial security and freedom of choice.Bucket list: once-in-a-lifetime experiences or purchases.
Fulfillment: living a meaningful life.Financial well-being: financial security and freedom of choice.Bucket list: once-in-a-lifetime experiences or purchases. Living your purpose, being of service and supporting a community is the path to fulfillment.
What’s your purpose? What kind of world do you want to leave to those who will come after you? What problems or challenges inspire you to take action? Answering these questions will point you in the direction of where you can be of service in the world.
Give your time and talents to living a fulfilled life.
Aim for financial security, as described in Money: Master the Game by Tony Robbins. This means not having to work to pay for the basics, including housing, utilities, food, transportation and insurance.
Financial security is a long-term goal but achievable if you follow my Rule of 25.
Pay off your debt. Aim for doing so in less than 25 months. Save 25 percent of your income. Build an emergency fund, then invest for financial security.Limit your housing costs. Set a target of not more than 25 percent of your income.Control your lifestyle. When you get a raise, add just 25 percent of it to your spending. Invest the rest for financial security. Save for 25 years. Consistent investing of 25 percent of your income for 25 years will give you financial security.
Pay off your debt. Aim for doing so in less than 25 months. Save 25 percent of your income. Build an emergency fund, then invest for financial security.Limit your housing costs. Set a target of not more than 25 percent of your income.Control your lifestyle. When you get a raise, add just 25 percent of it to your spending. Invest the rest for financial security. Save for 25 years. Consistent investing of 25 percent of your income for 25 years will give you financial security. Finish the first two financial security steps before focusing on achieving a bucket-list dream.
If you have a partner, make sure it’s a dream you share. Otherwise, you risk having goals that can pull you apart instead of bring you together.
In five steps, you can be on your way to living your bucket-list goals:
Pick a dream from your list.Create a budget for your goal.Decide by when you want to achieve it.Divide the money budgeted by the number of months until you need the money.Decide where the money will come from to save for your dream. If it seems like too much money for you to save each month, reduce your budget and/or lengthen the amount of time to save.By focusing on these three areas, you will be able to live a meaningful life, cross items off your bucket list and achieve financial security.
For other columns in this 12-part series, visit https://durangoherald.com/columns/40-money-savvy. Durango resident and personal finance coach Matt Kelly owns Momentum: Personal Finance. www.personalfinancecoaching.com.
