Identifying your goals

Some people know exactly what their financial goals are. And maybe you do, too. Or maybe you're spending all your energy managing your current financial situation. If that's the case, it may take a special effort to concentrate on what you think is important for the future. But you'll find it's worth the time to consider the next 5, 20 and 40 years of your life to anticipate where you'd like to be when that time arrives.

There are some goals that most people share: staying out of debt, owning a home and having a secure retirement. Others may be more specific to who you are, such as paying for your children's education or starting your own small business.

There are no right answers about what your goals should be — with the possible exception that most people have to be concerned about affording a financially secure retirement. That's why each person's plan is unique.

Some questions to ask

As part of the planning process, you'll want to ask yourself some important questions:

• Do you have enough cash saved in an emergency fund in case you lose your job or miss work because of an accident or illness?
• Will you need to support your parents after they retire? Are there other people who'll need your financial help?
• Do you hope to buy a home or upgrade to a larger one?
•  Do you have children or plan to? Do you want to plan for their education?
•  At what age do you want to retire?

These questions are only starting points. You'll need to consider your unique needs, personal situation, and how much time you have to achieve your goals to determine the questions you need to ask — and answer. One of the things that may complicate your planning is that you may be starting a family, buying a home or changing careers at a different time in your life than your friends or family did. For example, if your youngest child will graduates in the year you could take early retirement, your situation is different from someone who never had children or who had them very young.