Whatever it is that you desire to save money for, if it’s “financial security” that you are looking for, then you need to look beyond affording that wedding, or that second-hand car.  You should also be looking at what kind of lifestyle you want to live by the time you are retired. 

It’s not that saving for a car, a house, a wedding, or education for your children are not important.  By all means, they are VERY important.  But so is saving for your retirement.  If you don’t appreciate what I mean, I dare you to find out exactly what it is that your company has set aside for your retirement (assuming you’re employed), or to find out exactly what your business is worth today and what it might be worth by the time you retire. 

Don’t be surprised that you’re probably like the great majority of employed and self-employed individuals.  After planning for your wedding, for your children’s education, for your car installment payments, and for your apartment rentals or home mortgages, you’ll find that you may not be ready for your retirement.  Oh, and did I mention that you might have to provide for your aging parents who, themselves, failed to prepare for their retirement?

It’s beginning to sound depressing that you may not even want to go through this very important step in planning for your future.  But, if you’re really serious, you CAN do something about it.  If, after you have defined your goal, you will discover that you have a problem because you don’t know how to ever achieve it, then be consoled in the old adage that says, a problem defined is a problem half solved.

As I said in an earlier post, there is good news!  You don’t have to be a genius to be financially prepared for your future, and you don’t have to be wealthy to begin with. 

The first step is to face the future squarely and define the challenge: decide what your goal is first and then make a plan.  Your goal will not happen just because you defined it.  But neither will an investment plan work, if you have no goal to begin with.  So, take the time to plan your goals.  Dream a dream, if you want to.  But do it.  Now.

B.  Safety Money:

These are funds needed to meet life’s unexpected turns.  Normally, safety monies protect whatever real assets you have accumulated in the past like your home for instance.  In this regard, fire insurance will be the best investment option to protect this type of asset.  General liability insurances can protect your business from unexpected developments.  However, while there is a need to protect your assets, it is even more important to protect the person that generates these assets.  This is where life insurance comes in. 

 C.  Freedom Money:

While it is important to save and invest for your future, it is equally important to have funds that you can use for your non-basic needs.  These are funds for activities that give you enjoyment and fulfillment.  After all, life does not start after retirement.  It started on the day that you were borne.  Certain activities like having dinner with old friends or going to the mall with your kids, or that all-important annual family vacation should not be disregarded in order to save for long-term needs.  We need to keep in mind that God did not put in this world to make a living but rather to make a life.  However, these activities will have substantial price tags attached to them and therefore it is important to actually prepare for them.  For this purpose, short term instruments like savings and checking accounts, treasury bills and money market funds will be your be your best options.

 Another life goal that gives you fulfillment and a high sense of security is home ownership.  This is probably one of the biggest single expense that you will incur in your lifetime.  Home mortgages can play a vital role for this purpose.  However, you need to keep in mind that borrowing money from the bank will require you to put up approximately 20% of the value of the property and this not going to be a small amount.  Therefore, it is an excellent idea to plan for this activity several years in advance so you can save for the banks equity requirement.  Medium to long-term instruments like mutual funds, government or corporate bonds will be the best option to maximize on this type of savings.

To be continued . . .

Note: There is a print link embedded within this post, please visit this post to print it.