Identifying and Prioritizing Your Financial Goals Worksheet
by Charles Rotblut | May 28, 2020
Charles Rotblut recently spoke at the AAII Investor Conference 360. Video replays of all sessions are available for purchase. Go to www.aaii.com/investorconference for more details.
The first “The AAII Way” step in the process of creating a usable investment plan requires defining goals and cash flow needs. To help you organize your thoughts about what your goals and their timing are, we’ve created the following worksheet.
The worksheet contains four columns. The first is to list your financial goals (funding retirement, leaving an inheritance, donating to charity, paying off debt, etc.). The second column, “number of years away,” is the amount of time between now and when the goal must be funded. The third column, “spending duration,” is the length of time you expect to spend cash on the goal. “Priority,” located on the very right, is a numerical ranking of the importance of each goal. Only one goal can be a top priority, only one can be a second priority, etc.
For those of you who would like examples, we’ve created two versions of this worksheet using hypothetical people. The first is a recently retired couple, Bob and Jane, who have both children and grandchildren. The second is a millennial in her mid-20s, Elizabeth, who has college loans, some credit card debt and a little in savings. The May 28, 2020, Investor Update provides more background information about all three and our logic behind the worksheets.
Download the worksheet, fill it out and let us know how it works for you. We welcome any comments or suggestions you have for improving it.
Discussion
Harold Helm from California posted over 6 years ago:
There are many things which happened which I never planned for: real estate crash in 1980 with high interest rates,the huge stock market gains in 90's when I began savingat age 50 and investing , telling my broker to sell a stock which had gone from 10 to 80 and he discouraged me, only to see it go up to 100 and then then go back to 10 in 2000. When all I had saved went down to the princicpal value I had put in. That was was very stressful. I had saved but did not sell or switch to bonds, Then it recovered and crashed again in 2007. This time both stocks and real estate crashed. That was a double surprise.I watched it happen but only saw good tenants leave and become buyers. Soon we as onwners could only get bad tenants for investment properties. I retired as a self employed real estate broker and auctioneer and moved to in CA in 2010. Another unplanned event, happened -- We moved to be near our children and grand children in CA. Not good financial planning to go from lowest price market to High demand in east bay of San Francisco. We kept the family together on the West Coast. Then market slowly went up and all peaked in 2019. Now we are forced to take RMD from our SEP-IRA plan. We expected it to drop, but not so precipitously in march 2020. and not to be locked quarantined in our home with Covid-19 Virus pandemic. stopping schools,jobs, and recreation around us and our extended family here and in LA, and Portland, OR Prepare for the unplanned -war, virus, plague, earthquake, flood , tornado, or Volcano or even a Tsunami. It will happen or you will get cancer a car crash, a crippling law suit. You may have an early death and large medical expenses. Despite your plans. Just do the best you can along the way Save 10% and give 10% to help others or your church, and Pray to your higher power. You may have solar power, wind energy or battery powered auto. We will all have to make changes. It all effects our investment decisions what to buy and what to sell. Stock have been a good store of value. Risks have been rewarded and failures have be recovered from for 200 years of our families history in the South, North and West of the USA.
Lowell from Texas posted over 6 years ago:
This process looks like an excellent program. Since you are going to the trouble of creating all the worksheets how about leaving them in Word or Excel which are easier to use than having to pay for Adobe PDF program to edit, etc.
MJO from Georgia posted over 6 years ago:
LOL, Lowell. I think they expect the oldies like me to have my grandchild print it out so that I can fill it in with a pencil (with an eraser).
Tom from Oregon posted over 6 years ago:
Well, I have a step ahead of you somewhat but not bragging about it here. I am way into this project: we are both retired me from a Federal job in forestry and my wife in social work. Subsequently, I drove a school bus for 15 years because I could. And my wife finally retired. So we both have annuities in Federal and State pensions as well as social security. I think we are very secure in retirement funds moving forward because we both worked hard and planned for this scenario. At present, we have a family of funds in a mutual fund and my wife has a deferred VOYA account. The two together total about $150,000.00. We have a working stock portfolio of about $65,000.00, which is very unstable because of the present day market conditions. Our net income per month is an easy $8,000.00. We have a late model car and old Pick/up which are both paid for. The mortgage on our home is $1,300.00/mo. There are no other outstanding bills except medical and daily living expenses. We have medicare and good supplemental insurance. One immediate concern is we have 1 grandson whom is 14 years old and has 4 high school years before college is upon him. We don't plan on covering this totally but I am in the process of setting this up with no perceived dollar amount but assume there will be other revenue sources which will become available too. We have to be concerned about aged care also which could be prolonged or otherwise who knows. We could not see the expense of that type of coverage with the other resources we have for options. No light at the end of the tunnel. Which fork do we follow.
Charles Rotblut from IL posted over 6 years ago:
All, Thanks for the feedback. The spreadsheet now contains fillable fields. You will have to save it to your computer, as it cannot be saved to our servers. Our longer-term plan is to have web forms created, but we're seeking feedback on these prototype worksheets before doing any formal programming. -Charles
Phil from Texas posted over 6 years ago:
It seems to me that Elizabeth's priority 1 should be to pay down the credit cards and eliminate the ridiculous interest rates. Once that is done the capacity to use the credit card can take care of emergency expenses until priority 2, building savings, can be done.
CHARLES R from IL posted over 6 years ago:
Hi Phil, I understand your logic. We chose having Liz prioritize building up emergency savings to help her eventually get out of the cycle of relying on credit card debt whenever an unexpected expense pops up. Someone her age is likely to be renting and the emergency savings can also come in handy should she need to switch apartments. We do think paying down the credit card should be a close number two, however. -Charles
Robert D from LA posted over 6 years ago:
I know I don't have a total picture of how the financial goals sheet will be used but will share my comments. I would add additional lines; this allows additional stratification / definition of a goal, example fund retirement; I view that as having multiple subsets of goals this might include: a)essential spending (food, shelter, medical care, transportation, .....; b) discretionary spending (entertainment, dining out, vacations, .. ) Then I would add items like purchase a new car every 5 years; Gift Family vacations every 5 years to build memories; charitable giving every year; etc. Each of these could be quantified and given a priority. One could combine goals with equal priorities and time frames to group the investment to fund these into one item or have a funding strategy for each one. I like the format and the thought process, hopefully you could tell this, but will create an excel spread sheet with additional lines. Bob
D T from FL posted over 5 years ago:
This is a good idea and a great start. For me an Excel spread sheet would be more utilitarian but stating your thought process on goal setting and the examples were helpful. Thanks.
Jim N from AZ posted over 4 years ago:
I'm new to AAII and investing. 57 yr old retiree. I've never really invested in anything. My IRA and Roth just sit there in cash. I'm not sure what the point of this worksheet is exactly. How does it translate. I'd like something that allows me to plug in my current situation, goals, and maybe risk tolerance, and then suggest what an appropriate allocation mix strategy might be appropriate. Sorry, but I joined about 3 weeks ago and my opinion so far is that there's so many links and options on this site that I'm not sure where to begin. I'll keep poking around, but I think it could be more directed. Maybe it is and I just can't find it yet. At this juncture I kind of expected more from a paid membership. And YES to the folks that mentioned Excel. It's 2021 and there's really no reason to publish pdf files for form input or data input. Sorry to sound so negative. I'm optimistic I can make this service work. It's just not terribly intuitive so far.
CHARLES R from IL posted over 4 years ago:
Hi Jim,
The worksheet is just one part of our five-step PRISM Wealth-Building Process. I suggest you join us in the PRISM Academy, as it will help you create a personalized wealth-building plan.
-Charle
JAMES B from MO posted over 3 years ago:
I recently realigned our combined investment portfolios from 80/20 to 40/60 after experiencing significant losses during the first nine months of 2022. We wanted to reduce our risk of losing any more of our savings that would jeopardize our ability to meet expenses for another 25 years of retirement living. I’m interested in exploring your asset allocation planning process. What is the PRISM Academy?
H from FL posted almost 2 years ago:
At 71 I have a 90/10 stocks/bonds Asset Allocation. Due to my concerns regarding government profligate spending and the eventual bond market sell off, I intend to get out of bonds completely and increase my REIT and Precious metals holdings. Whoever wins on 11/05/24 will increase the deficit and the N.Debt.
11091265 1 from USA posted 11 months ago:
I thank you again for all your efforts and support and I wish you a happy new year with your families and children
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