Creating a financial strategy is like planning a vacation. First, you need to take care of the mundane details, including shopping for hotel accommodations and plane fares, as well as preparing your itinerary. While these tasks may be tedious, the time spent planning is well worth the effort once you are enjoying your vacation.

Developing a financial plan is a similar process. First, you must determine where you want to go and then, how to get there. Otherwise, you may encounter problems or even get financially “lost” along the way. However, with a financial road map in hand, you may feel more confident that you are headed in the right direction. You may also be better equipped to adapt to changing circumstances and implement a contingency plan, should the need arise.

Taking a Closer Look

While there are many facets to financial planning, each is equally important to the overall success of your strategy. Depending on your age, goals, and financial resources, your approach will vary over time. Let’s take a closer look at some main areas of focus:

Personal Finances.

Planning your day-to-day finances is an important first step in money management. Without a handle on your daily spending, you may not have the resources to meet your long-term financial goals. Develop and stick to a budget to ensure you are not spending more than you are earning. Once you feel confident about your short-term finances, you can begin to consider your long-term goals.

Personal Savings.

Another building block of your financial strategy is your ability to save. Undoubtedly, if you are able to save diligently, you may increase your chances for meeting realistic personal goals. Whether you are saving to buy a home, start a business, fund a child’s education, or enjoy your own retirement, putting money aside on a regular basis is an important step toward preparing for your future.

Insurance Protection.

Without adequate life and disability income insurance coverage, how would your family maintain their standard of living should you die unexpectedly or become disabled? To protect your family’s future, it is important to address insurance considerations with your professional advisors. 

College Funding.

Education is often the key to future success. However, the average price tag for one year at a private or state-funded college continues to climb. It has become more challenging to save for a child’s education or to fund your own continuing education. So, the sooner you start, the longer your savings have to work for you.

Retirement Income.

The retirement landscape has dramatically changed over the years. Today, individuals have a longer life expectancy; the future of government programs, such as Social Security and Medicare, is uncertain; and retirement plan funding responsibilities have shifted from employers to employees. In addition, taxes and inflation can gradually erode savings. Therefore, retirement assets need to work harder to help provide your income for the retirement you envision.

The range of available employer-sponsored retirement plans and Individual Retirement Accounts (IRAs) has created an unprecedented variety of savings options. Along with these choices, comes a vast amount of financial information that requires careful consideration when establishing your long-term financial goals.

Estate Preservation.

Transferring assets to future generations with minimal tax liability is an important goal for many individuals. There are tools that may help you achieve your desired results, such as trusts and wills. However, the complex nature of such estate conservation strategies often requires a team of trusted advisors, including an attorney and tax professional, to help ensure that your plans are consistent with your goals.

Preparing for the future is a complex process that involves research and careful consideration of both your short- and long-term goals. By identifying your goals and assessing your situation now, you may be one step closer to a financial planning strategy that best meets your needs.

As always, you can consult with me to discuss  your current situation.

Look for future posts on how to understand your 401k statement   and check out my recent post on 25 Ways to Save  Money!

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