You can watch this by clicking on the image below or by playing Step 02: Introduction on your DVD.

"If you don't know where you are now, how are you ever going to know how you can get to where you’re going?"

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The transcript below is a repeat of what is said in the video.

Sarah

Step 02 of Working Money helps you to take a look at where your money actually is - or where it goes - at the moment. Bob, can you tell us why this step is useful? I thought we were looking at retirement goals?

Bob

You're quite right, Sarah, quite right. But if you don't know where you are now, how are you ever going to know how you can get to where you're going?

Setting a goal helps us know what we want, where we want to get to, where we want our money to get to. That's a great starting point. Of course we also need to be realistic. We need to look at how we're doing with our money at the moment and how we choose to use it.

Sarah

So looking at where we are now helps us to be realistic?

Bob

Exactly. It’s all very well for me to say that you could put away all your salary every month and think of the pension you could get with that – but that’s just not realistic.

You have a salary because you need to spend it, on food, on your home – on luxuries like holidays. The next few Steps will take you through how you might reach your retirement goal and whether you can achieve your goal.

Let's go back to our journey.

If we started in Glasgow and we’re aiming to reach London by say five o'clock, then it's not going to help us if we're still in Barnsley at four! We'll either need to change the time we're aiming to reach London or we'll need to get our skates on and see if there's another way we can get there. Perhaps we could pay more and fly down instead. Of course you might have already reached Watford, in which case you should be on target.

Sarah

Thanks Bob. So we need to look at where we are with our money right now to help us work out if we can reach our goal. Let's catch up with Mark, John and Louise to see where they are with their money right now…

© BOC Pension Services and AHC Ltd 2012.