Financial planning is an important step to achieving your goals and ensuring your secure financial future. Taking the steps to accomplish this isn’t hard, but it’s important to start now. Here are some back-to-basics tips for starting your financial plan.
Determine What to Plan for
Your life will be filled with big dreams and lofty goals. But unless you luck into a huge inheritance or win the lottery, the only way to ensure you obtain those life experiences is by planning for them. Everyone’s goals are different, but here are some that you might want to consider:
- Buying a car
- Paying off your student loans and other debt
- Marrying your love
- Buying a home
- Having children
- Travelling around the world
- Helping your kids go to college
- Ensuring your family is taken care of when you die
- Passing your assets on to your loved ones
- Retiring in comfort
Make a Financial Plan
A good financial plan assesses your finances, breaks down what you’ll need to do to meet your goals, and helps you determine how long it will take to meet those goals comfortably. Here are some questions you should ask yourself.
What am I spending my money on?
You need to get a sense for your monthly cash flow. Make a budget to get an accurate picture of your income and expenses.
Do I have a plan to pay my debt?
This is a critical step in any financial plan. You want to zero out high-interest debt, like credit card balances or student loans. Interest rates on these may be so high that you could end up paying three times what you borrowed.
How much should I save for big goals?
If you want to buy a house, for example, you’ll need to have a plan for the down payment, mortgage and other costs. Any large goal like this requires changes to the way you are allocating your money. Reassess your finances and expenses, and consider borrowing options to figure out the best course of action.
How much money do I need for emergencies?
Your financial plan must include putting cash away for emergency expenses. You can start small and build on the amount you save. The important thing is to start saving as soon as you can.
What are my savings and investment options?
Investing can help you reach your goals faster. Try getting professional help with opening a portfolio that suits your needs.
How much money should I put toward retirement?
Retirement is the ultimate goal for many people. Start saving early if you want to live comfortably in your golden years. Start with a small amount and gradually build.
How can I protect my assets, my family and my future needs?
Insurance, insurance, insurance. Research policies like life insurance to protect your financial stability now and in the future. You can also make an appointment with an agent to get help.
How do I make an estate plan?
You want to ensure your wishes for your family and assets are carried out after your death. Your first step is to make a will. Consult with an attorney on how to go about that.
Evolve Your Financial Plan
A financial plan isn’t set in stone. It should evolve as your life evolves. You can create and adjust a financial plan on your own or seek help from a professional financial planner. Financial planners will help you get your finances organized, figure out a path to obtaining your goals, and assist you with any adjustments to your plan over time.