You’ve heard it before: “If you don’t know where you have been, you don’t know where you are going”. I would add, “and you can’t begin know where you are going to end up”. This is true for many things in life, including retirement planning.
While we cannot ever know the future, the past is always a good guide. And while uncontrollable life events may have played some role, your current financial situation is primarily a direct result of the decisions you have made in the past. Some of those have been intentional, some unintentional, some profitable, some unprofitable, some good, some bad, on many different levels.
Get Control of Your Financial Picture
One of the most important things involved in retirement planning is to understand your current personal financial situation. This includes things like:
- What are your current financial goals, and do they need to be adjusted to fit your retirement goals?
- What is your current level of income from all sources?
- On what do you spend your money?
- How much do you spend on each expense per month or per year?
- Are you spending your money in all of the right places? In other words, is your spending in line with your financial and retirement goals?
- Are you saving money, and are you saving it in accordance to your financial and retirement goals?
- Is your savings earning a return that meets your financial and retirement goals?
Relatively few people have done really a thorough job of considering all of these topics, and even fewer have actually been working their own personal financial plan over a long period of time. If you have, congratulations – you already know where you have been and have a good idea of where you want to be financially in the future. If you have taken the time to periodically review your plan and make adjustments, you probably have a pretty good chance of meeting those plans (including retiring like you want to) as well.
However, if you are like many people, you haven’t thought a lot about some or even most of these topics. Maybe you are meeting your monthly bill payments, and are still able to take a vacation once in a while, and are comfortable already, so you just haven’t paid too much attention. If this is your situation, please take some time to go through the other pages on this site to see how to get a handle on your financial situation – YOUR SECURE RETIREMENT DEPENDS ON IT.
Is There A Short Cut?
No. But there is ANOTHER important thing to consider, and the sooner the better.
Regardless of the specifics of your current situation, unless you have millions in the bank (i.e., in very secure investments) already, your income absolutely MUST be exceeding your current bill payments or you will never meet your retirement goals. If that is not happening, and you are borrowing from the bank or someone else just to get by, you MUST find immediate additional source of income now.
In fact, I would argue that the more that your income exceeds your expenses, the more time and effort you will be able to take to focus on your financial situation and improve it. Even if you are meeting your bills today but don’t yet have a handle on your expense situation, you should strive to maximize your income as a (albeit somewhat blind) first step. This will allow you to put some money in the bank and reduce your financial stress, while you take the time to improve your understanding of your financial position.
If you need an idea for increasing your income within a relatively short period of time, please see Getting Started Making More Money.
Feel free to leave me a question or comment on this page below – I’ll get back to you. Or, feel free to stop by my Wealthy Affiliate profile page and drop me a note there!