What is Financial Planning?
Financial Planning means something different to everyone. For some, it’s about getting by on their paycheck, for some it’s about budgeting and for others it’s about watching the stock market each day. Regrettably, few of us feel prepared to meet our ongoing financial obligations and objectives. Worries about money have become one of the greatest anxieties of our day. Because our lives and goals are so different, there is no turn-key or one size fits all solution for managing one’s finances and meeting financial goals.
Financial Planning Tips
Spend Less Than You Earn
No matter how much or how little you’re paid, you’ll never get ahead if you spend more than you earn. It’s easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings. It doesn’t always have to involve making big sacrifices.
Stick to a Budget
How can you know where your money is going if you don’t budget? How can you set spending and savings goals if you don’t know where your money is going? You need a budget whether you make thousands or hundreds of thousands of dollars a year.
Pay Yourself First
You’ve heard it before: Pay yourself first! If you wait until you’ve met all your other financial obligations before seeing what’s left over for saving, chances are you’ll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% to 10% of our salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.
Review Your Insurance Coverage
It’s important that you have enough insurance to protect your dependents and your income in the case of death or disability.
The Financial Lifecycle
Every individual has a financial lifecycle and it is important to understand where in the cycle you are, especially if you are serious about saving, improving your financial well being and achieving your goals.
We call these steps “Life Cycle Planning” because each step can be tied to the attainment of certain life-defining events that almost everyone goes through.