Mick Jagger, in one of his more reflective moments, noted that
“You can't always get what you want, but you just might find you get what you need.”
   He is probably right where long term financial needs are concerned. You can probably meet your most important goals but you have to know what they are. If the investment objective is single and clear, then the task of planning is straight forward. But for most of us, long-term goals often conflict with short-term concerns. We typically hope for growth, but seek to avoid risk. This is where risk/reward tradeoff comes in. In other words, one has to prioritize.

Here are a few rules that one should know in setting priorities:

1 Narrow your objectives It is important to identify your financial goals clearly and decide which are most important. By concentrating your efforts, you have a better chance of achieving what matters most.	2 Focus To accomplish primary goals, one often has to put equally desirable but less important ones on a back burner.
3 Conflicts Even important financial goals often conflict with one another i.e. school fees vs. retirement needs. So be prepared to improvise.	4 Time horizon The more time you have on your side, the more chance you have of success. Don't procrastinate. It is amazing what compound interest can do to your investment.
5 Choose carefully Some of the items that should be on your list of financial goals should include building an emergency fund, getting out of debt, paying school tuition, retirement savings and insurance protection.	6 Include family members If you have a spouse, make sure he or she is part of the goal-setting process. If you have children, they too, should have a say in goals that affect them.
7 Discipline Once you have prioritized your list of financial goals, keep your spending on course and try to be highly disciplined about this whole process.	8 Be prepared for change Your needs and desires invariably change as you age, so one should reexamine one's priorities at least every five years.

Identify Goals

“What are your top three financial objectives?” Most people have never thought much about which financial objectives really matter most. Instead we muddle through our financial lives, spending to meet the day-to-day expenses that always clamour for attention. Of course, there is nothing wrong with that approach except that it risks leaving the most important objectives unfulfilled.

Since financial goals continually collide with one another, the task at hand is not as easy as it sounds. Paying for a child's music lessons may rob money that would otherwise go into his college fund, for example. And saving effectively for kids' college can wipe out any hope of putting aside adequate money for your own retirement.

That is why to get what you want most you must:

Fortunately, you have at least one ally in meeting your long-range goals: Time. That is an advantage because of the power of compounding. For example, by putting aside only Baht 10 per week in a tax-exempted mutual fund earning say 10% per year, that string of savings would grow into Baht 9,000 in 10 years and Baht 99,000 in 30 years.

To put the power of compounding to work, one has to start early. Suppose there are two siblings who both invest in a mutual fund earning 8% a year. The sister starts at age 20, and for the next 10 years she saves Baht 20,000 a year. At age 30, though, she stops and never adds any more money. Her brother, on the other hand, waits until age 30 to start, but then dutifully puts away Baht 20,000 a year until he is 65. In this case the early bird will always be ahead. The sister reaches age 65 with Baht 4,280,000, while her brother will have a little under Baht 3,450,000, about 20% less.

Of course, it is far better to start early and keep it up. If both siblings started saving Baht 20,000 a year at the age of 20 and keep it up until retirement at 65, they would end up with nearly Baht 7,500,000. The point is that to put time on your side, you need to decide early which of the many possible financial goals are really worth pursuing and start working toward them.

To get started, make a list of all the things that you would need to feel secure, happy or fulfilled. Here are some of the items that you may want to include among the possibilities:

•  Accumulating enough savings to handle an emergency.

•  Buying a house large enough to accommodate you comfortably.

•  Getting out of debt and staying out.

•  Ensuring that your parents are well taken care of in their old age.

•  Paying for your children's college education.

•  Amassing enough wealth to retire comfortably.

Resolving Conflicts

Understanding your priorities can help you resolve conflicts among your goals. Suppose, for example, your father needs help paying for bypass surgery at the same time that you have to pay tuition fees and trying to save for retirement. All three expenses are at the top of your priority list. How do you resolve conflicts among them? No single approach will work for everyone but here are some guidelines that may help.

•  Is someone's health involved? If you believe that the ultimate purpose of money is to make life better, then you might decide that saving cash at the cost of your own well being or of a relative's is a poor choice. For most people, someone's illness is the rainy day for which they have been saving for.

•  How many people will be affected by my choice? Will one of your goals make your own life better while another will give equivalent help to two of your children? You could decide that when more people derive roughly equal benefit from a goal, its priority rises.

•  If two goals offer similar rewards, which causes the least harm? This method of selection is typically a last resort.

Analyze This.

  Your father needs expensive surgery, you have a child entering college and your retirement is not adequately funded. Obviously there are a number of ways this decision could be analyzed. It would be selfish, for example, but not totally unreasonable to conclude that saving for your own retirement should come first. You will not be able to live adequately on the money you expect from your provident fund and Social Security Fund and you do not want to depend on your kids for support. As for the child in college, he can take out a student loan. And your father can have the operation at a state hospital where it will cost less. That logic falls apart, however, when analyzed by the principles above. Both the “health” and the “least harm” principles suggest that helping your father should be priority number one.

Of course, you can not put all the money toward top priorities, nor should you. Instead, you need to set aside part of your income for current pleasures, so long as you have enough cash left over to put toward your long-range goals. It is also important to remember that as the years go by, your priorities will change. You will need to reexamine and rank your needs regularly throughout life in order to use your money most effectively.

Making Plans

  Now that you have identified the right goals, here are examples of some game plans that may help to meet three of the most common objectives: getting out of debt, paying for college, or financing a retirement.

Getting out of Debt

  If you struggle to meet credit card payments every month, then you probably need to shed or consolidate some of that debt. For example, you owe Baht 30,000 in outstanding credit card debt at a 18% interest rate and a Baht 1 million car loan at 6%. To pay off both these obligations, you need to pony up Baht 25,000 a month.

But if you are a home owner you could borrow Baht 13,000 on a home equity loan at the same 9% and retire those other bills.

Paying for college

  Tuition, room and board at a private university in the US can cost upward of Baht 1.3 million a year and that bill is projected to reach Baht 3.3 million in 20 years time. Your children may qualify for financial aid either in the form of a scholarship or a loan, and many students work their way through college. But if you want to spare your kids the burden of graduating in debt, there are a couple of good saving vehicles available for you.

Financing a retirement

A popular rule of thumb says that retirees need only 70% of their pre-retirement income to maintain their life style. However, other costs go up in retirement such as utility bills, the price of hobbies and travel and of course, the cost of health care. In fact, some retirees find they need as much income in retirement as they spent while working.

Unfortunately, traditional employers sponsored provident funds can only go so far and Social Security Fund will not make up the difference. So to make sure your retirement finances are more secure, you need to contribute to as many tax-exempted plans as possible. If you have an employers sponsored provident fund, put in as much money as you can. Since your contributions will be matched by your employers. In addition, if you have rooms left, you should take advantage of retirement mutual funds, where by up to 15% of your gross income up to a maximum limit of Baht 300,000 a year shall be exempted from income tax. Moreover, the earnings of both of these plans are tax exempted as long as you remain invested until retirement.