Financial planning is about understanding your values and goals and then designing a plan that will help you achieve them. This can be achieved by following the steps listed above, which are broken down into several sections:
Create A Balance Between Your Needs And Desires
The secret to financial planning is to strike a balance between your requirements and your desires. When you’re trying to save for numerous goals at the same time, this can be difficult.
If you have a family, retirement savings will most likely be one of your top priorities; however, don’t neglect to save for other major purchases in life, such as a college education or a home. According to financial advisor Vincent Camarda, there are numerous methods to achieve these objectives.
Create An Emergency Fund So That Unexpected Expenses Won’t Derail Your Plans
Set aside money in each paycheck as soon as possible so that those funds are earning interest before they hit the bank account where they will sit idle until needed later down the road; this method is especially effective if paired with automatic transfers from checking accounts into savings accounts each month.
Develop An Emergency Fund And Safety Cushion
An emergency fund is an important part of your financial plan, as it allows you to prepare for unexpected expenses and avoid taking on debt. If you don’t have an emergency fund, one of the first things that should be on your list of priorities is creating one.
Contribute To Retirement Accounts
If you’re not already saving for retirement, start now. Vincent Camarda sooner you begin putting money aside, the more time your investments have to grow and compound over time. How much should you save? That depends on your age and how much risk you’re willing to take with your investments–but a good rule of thumb is about 10%-20% of your gross income each year.
Understanding Your Values And Goals And Planning To Attain Them Is Financial Planning
Understanding your values and goals and creating a plan to attain them is financial planning. Writing down your assets and obligations or projecting your income over the next few years is a financial plan. It’s also essential to know how long those investments will take to mature so we can know our options if an emergency requires access to funds before they’re ready.