A goal without a plan is just a wish, and what better time to revamp your plans than during National Financial Planning Month? Whether you’re aiming for an entirely new approach to your finances or simply need to brush up on the basics, keep reading to learn three of the tried-and-true planning tips for creating a brighter financial future.
The path to a financially happy life entails paying off debts early, so you can focus on dedicating earnings to your future rather than your past. From student loans to credit card debt, all with varying interest rates and repayment processes, it can be tricky to know where to start, foiling even the strongest financial plans. One fool-proof tip is to start tackling your most expensive debt first, or the one costing you the most interest. Paying off your most considerable debt at the beginning of your financial journey can provide the hope and motivation to continue paying off secondary debts and eventually achieve complete financial freedom.
Every financial goal needs a proper budget to be achieved. Though budgets and plans go hand-in-hand, it’s essential to establish the differences and use them accordingly to live your best financial life. Think of a budget as a financial plan assigned to a specific period to help you reach short-term goals. For example, if you have a long-term economic plan of retiring within the next twenty years, set a budget that keeps you accountable for allocating a certain amount to a savings account with checkpoints every five years. Aside from making long-term financial plans more manageable, establishing budgets gives you insight into the resources you have to contribute towards your goals, pinpointing if they’re attainable or if lifestyle adjustments need to be made to keep on track to reach them.
Life can be unpredictable—a critical aspect of financial planning is ensuring your assets are covered, so your hard-earned money stays protected through life’s changes. One of the most commonly effective ways to protect your financial assets is to ensure they have proper insurance. For example, ensure you set up renters or owners insurance to protect your property and its contents in a disaster like a fire, flood, or robbery. Furthermore, disability insurance is essential to protecting and securing your ability to continue to earn income in case of an extended work leave due to illness or injury. Finally, with any insurance, read the fine print entailing exactly what assets it covers and what percentage, and plan accordingly to fill in missing gaps.
While insurance aside, another vital step to protect your finances is shielding your finances from inflation and taxes. This can be achieved by ensuring you’ve set up a retirement account that earns interest. Take the time to review your financial portfolio and where assets have been assigned, and assess the balance between risk and reward.
Check out our previous blog post on Top Financial Books of 2022. In addition, if you need personalized financial advice, our team is always here to help—contact us today to book an appointment!