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Identifying long-term goals

You've probably heard the old cliché, till you don't know where you're going, how will you know when you get there's Well, it holds true in the area of family finances, too. Establishing long-term goals for yourself and your family helps to keep your current financial picture in perspective. For example, if one of your goals as a couple is to have a full-time parent at home when the new baby arrives, you can start cutting back on spending now in order to get out of debt and establish some savings before the big day. Keeping your long-term goals in mind will help keep you on track whenever you're tempted to spend money on extras.

A necessary step toward working together as a financial team is to establish your life goals and review them with your significant other. Ask yourself the following questions to help you determine your long-term financial goals:

What hobbies do I want to pursue to add recreation and fun to my life?

What place does education hold in my future or that of others in my immediate family?

How important is home ownership in my future?

What are my career goals? What further training, if any, do I need to reach those goals?

How much time, money, and effort do I want to give in the near future to charity or church-related activities?

What character traits do I value most and want to develop in my own life and the life of my children? Are my financial goals and decisions in line with those character traits?

What are my retirement goals?

How will I take care of future healthcare concerns?

How soon do I want to pay off any outstanding consumer debt?

At the end of my life, what things may I regret if I choose to spend my money on less important pursuits?

Writing out your goals and the values that are important to your family can go a long way toward keeping your life and finances on track. But even if you don't write down your goals, thinking through your priorities and keeping them in mind as you make decisions (financial and otherwise) is a good habit to develop.

Establishing savings goals

After you've discussed your financial desires and goals for life, set some savings goals. If you and your partner are not accustomed to working together toward a financial goal, start with something relatively small like saving for a new couch or your next short vacation. You can usually reach these goals within six months to a year, and so you get a fairly quick return on your savings investment - and an opportunity to reinforce the value of working together toward a savings goal. After you've seen that you can work together toward small goals, start working on long-term goals like retirement and the kids' education.

One way to set up a savings plan is to set aside a small amount of money in a special account from each paycheck until you've reached your short-term goal. Or keep a big jar on the dresser in the bedroom where you can empty your pockets and purse of any loose change. One summer, we financed a long weekend at the ocean for our family with just the change we threw into a change jar every day. Seeing a successful example of how easy it can be to reach a savings goal can be just the impetus many spendthrifts need to give second thought to their impulsive spending habits.

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