Your financial “End Game” explained

Before anyone can get excited about finances, I believe there needs to be a destination that motivates people towards making financial decisions. I call it the “End Game” and it is core to financial success.

Your End Game is what gets you excited about your financial future. It is a constant goal that exists from the first day of your financial journey all the way to the day you retire. Your End Game is your “carrot” that makes all the sacrifices you make now worth while.

A lot of young people likely have no idea how they want to spend their retirement years, and understandably so. People pick up all sorts of hobbies, goals and aspirations during their lives which they didn’t know they liked as a teenager. The problem with ignoring your End Game is that it results in people making decisions which benefit them in the present, but are a detriment to their future. For example, excessive eating out at restaurants, clothing purchases and travelling can add up to thousands of dollars per year. That money, put into investments over 30-40 years each and every year, can turn into hundreds of thousands or even millions of dollars at retirement. Yes, it requires making sacrifices today to prosper tomorrow. This is why its so important to know what specifically you’re sacrificing for so that the pain today is worth the pleasure tomorrow. Without the End Game, its much easier to fail in executing a sound financial plan because there’s nothing concrete to work towards and get excited about and money becomes this abstract concept without any topical satisfaction on the horizon.

I think even teenagers can come up with some kind of plan for their retirement on the first day of their financial lives. It will ebb and flow over the years as their tastes, hobbies and passions evolve, but everyone can picture a dream retirement. Let me illustrate.

Sample End Game

Everyone has visions of retirement full of travel, golf and entertainment. Those are wonderful goals and very common for people to aspire to. Those things come with a price of course. If you intend to travel once per year, golf 20 rounds a year and have a vacation property on a beach, put a price on those specific things and write them down. Also write down the salary you think you need in today’s dollars to have an enjoyable retirement and multiply by the number of years you intend to be retired for. Quantify all of the costs you think you’ll need to spend each year of your retirement. Add on the amount of money you’d like to leave behind to dependents when you pass away and you have yourself the pieces of the puzzle you need to quantify your end game.

How do I get to my End Game?

In my book, “A Fighting Chance: The high school finance education everyone deserves”, I run through a specific example of an End Game, how to quantify it and how to make a plan for annual investment contributions required to achieve the End Game.

Having a plan and a clear path towards it makes the plan real from an emotional perspective. If the plan stays on track and you see it unfolding before your eyes each year, you’ll be motivated to keep it on track.

Give it a shot. Write down your ideal retirement lifestyle – get excited about it. Then write down what you think it will all cost. Work backwards to figure out how to get there!

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