The Retirement Corporation of America

Digging Deeper Into Developing Your Financial Plan

SINCE THE ESSENCE of achieving financial success is having a financial plan and achieving it, let's look over the planning process.

To sum up things, here's the Three-Step Strategy for Drafting a Realistic Financial Plan:

•  Step #1: Think through your goals for the future. What do you want out of life? A grand home? College for the kids? A second home in the country? A secure, comfortable retirement? The more precise your goals, the clearer the target you are aiming for.

•  Step #2: Make a plan for achieving those goals. Your financial plan is your strategy for reaching your goals.

•  Step #3: Stick to your plan. It's not enough to want to achieve financial success. You must apply all the discipline at your command.

How to Set the Goals You Want to Reach

Your goals are where you want to be at each stage of your financial life—your dreams for the future.

You set your goals with the help of your family—with your spouse and your children. Call a family brainstorming session to get the process rolling. Jot down all ideas on a piece of paper. Make those family brainstorming sessions an annual event so you keep your goals fresh and up to date.

Fitting Your Goals Into Where They Need to Go

The best way to set up a plan is to think about your goals across a timeline—from those that need to be reached soon, to those that you don't expect to reach for a long time. Break your goals down into three broad categories:

•  Short-term goals. These are things you want to accomplish in the next year or so. They might include paying off your credit cards, building up your savings for emergencies, starting a college fund for a young child, or making some kind of large purchase, such as a fancy backyard barbecue grill.

•  Medium-term goals. Items in this category will take you between three and five years to accomplish. They might be making a down payment on a home, making a major home improvement, or paying off student loans.

•  Long-term goals. These will take you more than 10 years to reach. The most important one is accumulating enough money so you can live in comfort when you retire. Other long-term goals might include starting your own business, paying off your mortgage, or traveling extensively.