Knowing Your Numbers Will Revolutionize Your Financial Life

numbersKnowing Your Numbers Will Revolutionize Your Financial Life

What is the one step you can take that will revolutionize your finances? It is the one process that most people don’t go through. Simply put, it is all about getting a financial plan. It is about knowing your numbers. Now, I am not talking about the 100 page plan that many financial advisors think you need. I mean one page of simple answers about where you are and where you are going.

Know where you are, so you know where you are going.

Why are you saving and investing money into a 401 K plan? How would you answer that question?  Most people would say for retirement. What if you were to answer that differently? I am saving and investing so that I can retire at age 65 and create an income of $5,000 a month that will last me the rest of my life. Now, that is an answer with a target!

Further, what if you could add to that answer – and I am on track!!

Knowing that information will provide great benefits.

1)      You will be at peace with less stress– I would suggest that most people are stressed about retirement because they have no goals and have no idea if they are on target. The unknown is a bizarre thing. On one hand it comforts us to not know. What you don’t know won’t hurt you.  On the other hand, if you know,  you have a greater sense of peace. Knowing clears up the uncertainty.

2)     You become a better decision maker – Pop Culture Finance does not want you to make decisions because you might make a decision that limits the amount of money that the industry can make off of you.  Decision making is vital to future success.  If you know you are on track, it is much easier to make decisions.

3)     It gives you control – You know exactly what you need to earn each year. You don’t have to worry about staying in line with the market.  All you have to focus on is your own personal rate of return.

4)     It gives you your numbers – At the end of each year, you know exactly where you should be in total investments. Based on that year-end target, you know if you are ahead, on track, or behind. If you fall real behind, then you know you have to adjust your numbers.

Why does the vast majority of people not know their numbers? I will have people come into my office and proclaim I am never going to retire. I will ask, “How do you know?”. They reply, “I just know”. Realistically, they don’t know. They are just making an assumption.

I think it is the “what you don’t know won’t hurt you” syndrome. It is a coping mechanism for money.

What is the answer? Know where you are so you know where you are going!  Get your numbers and clear up the confusion.

Bob Brooks is host of the Prudent Money Radio show.  Bob is also a financial advisor who helps people set and achieve financial goals. For more information or to set up a phone consultation, email Judy Parrish at judy@prudentmoney.com

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