What Are You Investing For?
_by Justin Lukasavige
Goal Setting Techniques That Work
Much like an exercise program, you'll want to determine your goals before you begin to invest. Your goal might be retiring in 20-30 years, kids college funding or, if you got started a bit late, retirement in the next 5 to 10 years.
It's very important to think through what your goals are and then determine your investment style. I should make it very clear that when I talk about investing, I'm not simply talking about taking chances with your money and hoping for a big return. I'm much more subdued, but at the same time aggressive in obtaining the biggest return for the least amount of risk.
Before we actually talk about that however, I should point out what your situation should look like before you begin doing any kind of investment.
If you've met with us in the past, you'll be familiar with the Financial Freedom Steps. These steps are helpful to anyone who desires to get their life on the right track. The first step is to develop and actually use a spending plan or budget. You should keep track of all of your income (pay check) as well as all of your outgo (monthly expenses).
It's been said that budgeting is telling your money where to go, rather than asking where it went. If you do not have a plan for your income before you receive it, then it will go places where you simply can't even track it down.
Most of the people and businesses we help get set up on a budget tell us that they feel like they've gotten a raise when they start living on a budget. I bet that if you haven't ever done a budget, you can't tell me off hand where all of your money is going. Try it and find out.
While you are developing a spending plan, you should also be striving to save $1,000 for a 'beginner' emergency fund. Once that is complete, Step 2 is to aggressively pay off all of your debt (except for your house) as quickly as possible. Step 3 is to finish your emergency fund with between 3 and 6 months living expenses.
Then and only then do we recommend beginning any investment program. The reason is simple... the biggest wealth building tool each of us has is our income. Once your income is freed-up, you can focus more of your time and energy in earning back the money you were formerly paying in interest.
After all, if you're paying a credit card 17% in interest and pay that card off, you are now receiving a 17% return for yourself by not paying it to the bank. If you can then earn 10% on your money, that is a 27% spread!
Justin Lukasavige is a Personal & Business Coach and owner of Lukas Coaching. Visit www.lukascoaching.com/resources.htm for a ton of free tools to help you improve your health, finances, business, career & life!
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