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Yes, set goals for 2007, but you'll need a plan, too

Updated: May 3, 2013 12:14PM

What's your financial goal for the New Year? Is it something tangible, like getting out of debt or saving enough for that new car, or changing the investments in your 40l(k) plan? Or is it just a big "number" -- making a million or winning the lottery? Maybe your goal is related to getting someone in your family to do a better job managing money in the New Year. Maybe it's getting your own finances in shape.

The first rule of goal-setting is: Set no goal you can't control.

There's a big distinction between goals and wishes. You can hope for those lottery winnings, or for your spouse to change his or her money personality. But in my opinion, those are equally long-shot probabilities. Why not concentrate on the things you can control: your own money decisions?

What you can do is set up a plan, and the systems to back it up, so you're less at the mercy of fate or someone else's behavior.

A Savage Truth: A goal without a plan is just a dream.

It's fine to dream of success, of riches, of vacations or retirement. But you'll never get there without a plan. And the hardest step in making that plan is to define your goals.Defining goals

So as we move into the New Year, the first step is to write down your goals. Some may be for this year, some for the long term. Each step along the way is important, so don't be afraid of literally making a list that includes things like: "Pay an extra $50 a month on my Visa," or "Sign up at work for an extra $50 for the 40l(k) plan."

Every little step helps you reach that longer term goal of financial freedom.

In fact, no matter how you define your goal in terms of numbers, for most people the goal is simply this: not having to worry about earning "enough" money. How you define "enough" is up to you.

And so is how you get there.

If you can't control yourself, or someone you love, you have to set up a system that removes the decision-making process from the whims of emotion and the temptations of the moment.

If your excuse is that you "can't afford it," take a quick look at your paycheck stub. Every week there's a deduction for Social Security. If you're under 50, there's a very small chance that it will provide anything meaningful for your retirement. Yet you don't complain when that money is whisked away, leaving you less to spend.

A great goal is to set aside an amount equal to that Social Security deduction for your own, personal retirement plan.

Impossible? Not at all. You might not be able to deduct a similar amount as Social Security from your paycheck, but how about a second job this year, with all the proceeds going into your own Individual Retirement Account?

Not having enough money to get started is no excuse. Two mutual fund companies let you open IRAs with as little as $100, if you commit to an ongoing and automatic monthly deduction from your checking account. They are and

Their Web sites publish toll-free phone numbers, and they're ready to help you get started. Now, what's your excuse?Money and spouses

You married for better or for worse, but not for money arguments! If you and your spouse have different goals, or your spouse has no goals at all, this is the week to sit down and talk about it. Otherwise your finances will be a constant source of frustration.

Since you can't change your spouse's money personality, change your system. Take money away as an issue by putting the checkbook online -- and guarding the PIN access. Close those credit cards, or agree to remove his or her name from the account. If you can't agree on this basic process for shared financial goals, then you need counseling on a much higher level.

Money doesn't bring happiness in itself. But the freedom from financial worry does bring peace of mind -- and the opportunity to enjoy the non-material things in this world, which are far more important.

That state of mind will just be a dream, until you set some goals and make a plan to achieve them. That's my wish for you in the New Year, and that's The Savage Truth.

Terry Savage is a registered investment adviser. Check out Terry's answers to readers' questions at, and click on Business.

Distributed by Creators Syndicate.

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