When it comes to financial planning, many people simply throw their hands up and stuff their money under their bed. If this is your version of financial planning, you are not alone. We are here to help with some financial planning tips to get you started along the road to financial freedom for your future.
- Do you need a financial planner?
- How do you find a financial planner?
- Budget Budget Budget
- How much should you save?
- Get debt under control
- Get starter investments
There’s not really one answer to this question. Sometimes beginners want help with their financial planning, others do not need help until they get further into the financial planning process. It cannot hurt to get a little help with your financial planning periodically, whether you are seasoned in your financial practices or just getting started with your investments. If you think you need help with your financial planning, then you need it.
If you decide to get professional help with your financial planning, your financial planner should at least have one of the three leading professional designations. Many people who call themselves “financial planners” but lack professional certifications. They should have a CFP title, PFS title or ChFC designation. Also ask the planners for their code of ethics and their work history.
Budget isn’t a bad word. Keeping yourself on a budget isn’t restraining. In fact, it is a liberating form of financial planning. Try writing down everything you spend for a month and see just how all those little expenditures add up. Set goals for yourself and set aside money to pay bills and necessities first. Set aside money for savings and an emergency fund, too. Then give yourself “playtime” money after everything is paid. Don’t go over your budgeted amount.
Financial planning experts suggest you tuck away at least 10% of your income before taxes each month to go toward your retirement. If you are already middle age and haven’t given much thought to financial planning, you will need to put away more than 10%. If you are about 50 years old and you want to keep your lifestyle up after you retire, financial planning experts say to save about 20% of your income. Then you will also need an emergency savings equivalent to at least three months salary.
One of the best financial planning moves you can make for your future is to get yourself out of debt. Having credit card debt and loans at 10% interest simply cancels any effort to make investments. Financial planning includes clearing debts so you can benefit from your investments.
If you decide to do your financial planning alone or even with the help of a professional, you need to start somewhere. Take a chunk of money and invest it. Use your bonus at work or your tax returns and invest it. Another financial planning idea is to take the money from the little things you cut out of your spending and invest that money in funds that allow smaller monthly direct deposits. Try investing in mutual funds, a 401k or a Roth IRA.
By D. Blair Thompson