Amid stock market volatility, take a fresh look at financial goals.

If you are exhausted (as I am) watching the markets go up and down on a tweet, perhaps you should step back from the day to day kerfuffle which is the stock market and take a fresh look at your goals. 

Goal-based investing is nothing more than establishing separate objectives for separate life events. This is much saner for the average investor than simply trying to beat an arbitrary index. Retirement 40 years in the future calls for one plan, while college education for your kindergarten child or grandchild requires an entirely different plan. These discreet pools of money with diverse goals may sound confusing but the concept doesn’t have to be. 

Behavioral finance experts refer to this as mental accounting. 

Mental accounting allows us to compartmentalize the various pools of money we set aside for specific purposes. Whether we establish separate accounts for each goal (as I did) or simply allocate a portion within a larger account, our financial objectives each represent a different time horizon and require a corresponding level of risk based on the factors unique to each investment. 

Mental accounting focuses us to implement our savings plan and our investment plan accordingly.

The mother of my best friend conducts her mental accounting in the most literal way.  She carries a collection of envelopes in her purse, each with a specifically allocated amount of cash. Postage, coffee, groceries, entertainment – each envelope contains a discreet amount of money for a specific purpose.

What do you care if the market is up 20% if you have generated growth that moves you toward your goal?  And, what we know is that over the long term, stocks are just about the best investment you can hold. So, consider your goals. Invest accordingly. And remember that a market cycle is between three- to five-years so don’t invest money you may need in a month. However, for long-term goals, invest and ignore the volatility. 

Now a word for the ladies. The majority of women state as a clear financial goal they do not want to become a financial burden to their families. Yet most women self-identify as “not confident” in making financial decisions. Add to that, 70% of women characterize themselves as savers rather than investors. 

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Whether you are home raising your children or in the workforce, be sure to set money aside for retirement. As I’ve written in the past, the average age of a women’s first divorce is 30. The average age of a widow in the U.S. is 59. If you are unemployed or making a starvation wage, you can collect the widow’s social security benefit, but not until you are 60.  his benefit is a reduced amount of your spouse’s full social security distribution. But if you make more than $32,000 annually, forget it.

So, the prudent thing for every woman to do is set a retirement objective – for yourself – and  save to invest for your own future while you manage all the other financial objectives your family requires. Don’t be overwhelmed. Just set your goals and block and tackle every day.   

Nancy Tengler is chief investment strategist at Tengler Wealth Management, ButcherJoseph Asset Management. She is the author of “The Women’s Guide to Successful Investing.”