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Financial plans are often couched in linear, two-dimensional terms. Contribute X, end up with Y. Blah, blah.
That’s a turn-off for most women, studies show. Women like to weave together multiple goals.
Solution: You need a 3-D plan, a model you can carry into any 401k seminar, adviser meeting (even the dreaded spousal money talk). Start here.
- 1st Dimension: Your Life
Socking away 3% of your paycheck will net you one lifestyle down the road; 6% a more comfortable one. By focusing on where you want to end up, you can inspire yourself to save more, and develop a long-term investment strategy that matches your goals (whether more aggressive or less so).
- 2nd Dimension: Your Time Frame
If you’re 30 years from retirement (roughly age 67 or 70), that’s a longer runway than if you have just 15. Knowing how long you have to grow your money will influence how aggressively you want to save and invest.
- 3rd Dimension: Your Risk Level
Stocks are more risky, but offer the potential for more gains. Bonds are the reverse. Real estate is a wild card. Examine each side of your 3-D model as you decide how to invest. Maybe you’re willing to take on more risk—to get more growth to achieve certain dreams. Maybe not.
It’s an ongoing conversation, and your 3-D plan can easily adapt.