Financial Planning

Financial planning is a tool every individual should utilize to make the most of their money in their lifetime. Regardless of your childhood upbringing, your education level, your current age, or your income, having a financial plan is right for you. Financial plans will help you make better decisions with your money and help ensure your final wishes are honored.

Understand Your Financial Position

A good place to begin when establishing a financial plan is to know your net worth. Calculate assets (what you own)—this includes bank accounts, retirement accounts, real estate, automobiles, and personal possessions—and subtract liabilities (what you owe)—this includes personal loans, student loans, mortgages, automobile loans, and credit card debt. The difference between your assets and liabilities is your personal net worth. Furthermore, use the financial data you gather to calculate net worth and study your spending habits. If you are not satisfied with your net worth or with your current financial habits, consider ways to increase your income or cut your spending. And, because your total net worth will change during the course of your lifetime, you can take steps to change how your financial life looks now and in the future.

Set Financial Goals

Envision what you want to accomplish in your lifetime with your money. Goals will differ among individuals, but may include a combination of short and long-term goals, such as buying a new car, paying for college, funding retirement, or making a down payment on a new home. Pinpointing specific financial goals and setting a deadline to reach them will enable you to focus your money on your goals at specific points in your life. The process of reaching for your financial goals may test your patience, but may also foster your creativity, and may, ultimately, help you put your money where it matters most to you. 

Protect Your Financial Assets

Insurance is a necessity to protect your financial assets. Medical costs continue to rise, but medical insurance coverage can protect you and your family in the event of an illness or injury. Term insurance policies can protect your family from financial loss in the event of premature death. And automobile insurance can cover financial obligations and compensate third parties in the event you injure someone or cause damage to a third party. Living wills serve to protect your assets after you die without going through probate. Without a will, assets will be distributed according to state laws. A financial power of attorney (POA) is an important document that grants authority to someone to make certain financial decisions on your behalf. In the event you are unable to manage your own money, the person named in your POA can access bank accounts and pay your bills. Trusts can also be used to meet financial planning goals. Testamentary trusts are established as part of a will and take effect upon death. Revocable trusts enable you to retain control of your trust assets and give you the ability to revoke or change the terms of the trust at any time.

Take Charge of Your Financial Situation

Be accountable for the financial future you want to have. Make changes where necessary to reach your financial goals and strive to achieve the goals you establish. Lastly, seek expert help when needed to secure your financial future and protect your assets.