Three Guesses To Help Reach Your Financial Goals

How much money do you think you’ll need in retirement ten years from now?

Twenty years? Thirty years?

We know — sort of.

But this lack of precision can lead to one of two things: 

  • We end up doing nothing because we assume we’ll never know the “right” number
  • We run formulas and use calculators until our heads spin, trying to get the “right” number

I’m not crazy about either of these options, which leads me to a third option: save

We guess.

Here’s the thing, for some goals, like a family vacation, we can probably get down to the penny how much the trip will cost.

So we save the money, make the plans, and go on the trip.

Goal accomplished!

But what about the goals that will take longer?

That’s where we start to guess.

Yes, I know how crazy it sounds to guess about money, but stick with me for a minute.

I refer to it as the “three-guess process:”

  1. What is the goal?
  2. When do you want to do it?
  3. How much will it cost?

Remember that you want to be as specific as possible about the goal, even though it’s a guess.

Getting specific will help you feel more confident guessing about the cost.


For instance, “financial security” sounds great, but you’ll have a hard time guessing a realistic cost.

So when financial security comes up in client discussions, I suggest clients set a goal to build an emergency fund if they haven’t already done so.

Many people feel good about having six months worth of expenses saved, but for other people, it might be three months.

Only you know the number that feels right for you.

But the important point is that you’ve set a specific goal and have a pretty good idea of the cost to reach that goal.

Of course, there’s the possibility your actual monthly expenses will fluctuate over time.

But your best guess now will do a good job of helping you deal with most of the future possibilities.

Doesn’t that sound better than doing nothing or walking around with a calculator glued to your hand?

Plus, this process of guessing helps you stay flexible.

Life will happen, and you’ll need to make adjustments along the way.

Those adjustments are easier to make when we allow ourselves to guess and not obsess over the idea of the “right” number.

This column originally appeared at the New York Times.  


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Carl Richards is a Certified Financial Planner and a columnist for the New York Times, Morningstar magazine and Yahoo Finance. He is author of 2 books, The Behavior Gap & The One-Page Financial Plan. Carl lives with his family in Park City, Utah. You can find his work and sign up for his newsletter (which has an international audience) at

'Three Guesses To Help Reach Your Financial Goals' have 3 comments

  1. Avatar for Property Update

    June 7, 2015 Anna

    Sorry to say that but I feel it was waste of time reading this article. What’s the point in telling about quantifying something without telling how to do that… 6 or 3 months worth of expenses put in savings is the only takeaway for me.


    • Avatar for Property Update

      June 7, 2015 Michael Yardney

      Sorry you didn’t benefit from this – at least you got one takeaway:-)


  2. Avatar for Property Update

    June 4, 2015 Jim Cooper

    A ‘working estimate’ sounds so much better than a ‘guess’ ! Nice article.


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