Setting Financial Goals for 2014

by Michael on Jan 1, 2014

Image of 2014

Welcome to 2014! I’m not sure about you, but we don’t have any major, life-changing resolutions for the year ahead. That said…

We do have some financial goals for the next 12 months. What sort of goals? Since we don’t have any debt, we’re primarily focused on our investment accounts.

Looking ahead

What follows is a quick overview of our goals for 2014:

These are, admittedly, pretty boring goals. And they’re even more boring given that they’re dialed in to the point that they’ll almost certainly happen — in some cases, without me even lifting a finger. As for less boring goals…

The elephant in the room

There’s one big hole in our family’s financial system: we have little in the way of a transition plan. I’m the one who handles our finances, and it would be pretty tough for my wife to piece everything together if I kicked the bucket.

With that in mind, I picked up a copy of “If Something Happens to Me” a few years ago. I had every intention of using it to help me assemble a user manual for our financial life, but I haven’t followed through.

In view of the above, I think it’s safe to say that this — the construction of a financial user manual — is my #1 goal for the New Year.

Advice for financial goal-setting

Finally, a word of advice. When formulating financial goals, I recommend framing them in the context of things over which you have some degree of control.

For example, instead of targeting a certain net worth value, which ties success or failure to market performance, you should instead focus on things like savings rates, contribution amounts, and the like.

Yes, there is value in setting longer term dollar goals but, as your assets grow, short term market fluctuations will begin to dwarf your ongoing contributions. This, in turn, makes short-term portfolio predictions meaningless.

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