Face Your Future With A Financial Plan
Everyone has goals for their future and their children’s future. But to make goals a reality, you have to have a plan to meet those goals. This requires budgeting, organization and maybe even some sacrificing. But that’s easier said than done, especially since 51% of families in the US would face economic hardship if they missed even one paycheck. Trying to save for the future in these circumstances seems impossible.
Whether you’re one paycheck away from hard times or not, a good financial plan can help you map a way out of your financial trouble. Plan now, and look ahead for the sake of you and your children by developing a financial plan yourself, starting with these first steps:
Outline Your Objectives
Are you trying to find a way to pay for your child’s college in the next 10 years? Or do you want to focus on securing another home or save for retirement? No matter what you hope to achieve, write it down and use it as the target you’re aiming for throughout the mapping process.
Think about what motivates you and what you want to do for yourself and your family in the future. If you’re unsure of how to put this plan in motion, it might be in your best interest to meet with a financial advisor; however, if this is too much of an expense, you can easily turn to online resources for guidance.
Follow The Flow of Your Money
Next, you need to take a look at your money and find out where it’s going. If you’ve already created a budget, which lists all of your expenses and income, you can start there.
With this information at hand, figure out your net worth. Add up your bank accounts and value of properties, then deduct your total debt from this amount. Calculating your net worth is beneficial now and later since it will serve as a point of reference to periodically gauge the effect of your financial plan.
This bigger picture of your financial health should push you to fine-tune your budget, allowing you to see where you can cut back and save more.
Save All You Can
Spare change can go a long way. In fact, if your child is in a daycare that costs you $900 a month and a cheaper option saves you just $75 a month, you can save $900 a year by going with the alternative. That’s $900 more you could put directly into your child’s college fund.
Ideally, you should explore all options and see if there’s any way you can save a few more dollars a month on unavoidable expenses. If you’re thinking of buying a home, having enough money set aside to make a higher down payment will result in lower monthly payments and interest rates. On the other hand, you could get a mortgage with a low down payment, but you’ll need to have private mortgage insurance if the amount you borrow is greater than 80 percent of your property’s value—which means more money spent per month to cover the premiums.
Once you have savings to work with, take advantage of your hard work and protect it. That doesn’t mean you have to stuff in a mattress or lock it up in a savings account, though. This is where strategy comes into play with your financial plan.
Invest In Future & Family
Investing can be simple, and you can start contributing to your retirement plan or increasing your contribution. There’s also the option of using an online tool to invest from an IRA to pad your retirement savings. These are all easy ways to invest in yourself.
To invest in your children, open accounts as soon as possible so that they can grow alongside your child. You can open a 529 plan to start saving for college with the luxury of tax-free distributions for qualifying expenses or open a Roth IRA account to help your children with a variety of expenses.
In addition to investing in your future, it’s important to consider how you can protect your family if you were to pass away unexpectedly. One of the easiest ways to line up your estate is by preparing a trust, which is your best bet to help your family avoid probate cases. Meet with an advisor to ensure your children and your estate will be properly managed, and make several copies of your will and share one with a trusted family member.
A financial plan can get you where you want to be. It’s better to start sooner rather than later, and it doesn’t have to cost a thing upfront. Do what’s right, and start managing your financial health today.
Written by:
Sara Bailey