Financial Planning – A Beginner’s Guide

A financial plan is a comprehensive picture of your current finances, future goals and the strategies you have set to achieve those goals.  You can think of it as a roadmap.  And, you can do it on your own, or work alongside a professional to help guide you.

Simple steps to help you create a financial plan:

1. Set financial goals – Take a moment and think about what you want your future life to look like.  In 5 years, what do you want it to be?  How about in 10 or 20 years?  Do you want to own a car, own your home?  Do you want to be debt-free?  What will life look like in retirement?  Setting concrete goals will make it easier to complete the next steps as you work to make those goals a reality
2. Track your money – Having an accurate picture of what cash is coming in and what is going out each month will show you ways you can better direct your money to reach your financial goals.  This will allow you to create short-, medium- and long-term plans.
3. Pay down high-interest debt – This is an important step in any financial plan.  Paying down high-interest debt such as credit card balances, payday loans or rent-to-own payments is essential to being able to redirect that money towards the goals you have set for yourself.
4. Build and maintain an emergency fund – All of the planning in the world will not help if life throws something your way that you are not prepared for financially.  A savings of 3 to 6 months’ worth of income is recommended to help prevent financing emergencies through credit avenues.
5. Take advantage of any employer match opportunities – Will your employer match any part of your contributions to a retirement plan?  If your company offers a 401(k) retirement plan and adds matching funds based on your regular contribution, you should jump on it – or you are turning down free money and a chance to build a healthy retirement fund.
6. Invest to help build your savings – While investing can be an intimidating topic for many, there are simple options you can take advantage of as you get started.  It is not only for the rich, or once you are established in your career.  There are many options available for investing that can be done on your own, or you can engage the guidance of a financial planner.  Employer-sponsored retirement plans; traditional or Roth IRAs or 529 college savings plans are all investment options that can help you save to reach your financial goals.  Each has unique features, so be sure to do a little research and see which is the best tool to meet your savings need.
7. Protect with insurance – People with a good financial plan hope for the best, but plan for the unexpected.  Insurance helps with that.  Determine the appropriate kinds and amounts of insurance for your particular needs, review coverages and identify any gaps to maximize your protection and help you stay on track with your goals.

This financial plan is never a static document – it is a tool to help you make and track progress and it will adjust as your life changes.  And, there is no one-size fits all approach.  Your plan will fit your situation and provide a foundation for growth. 

Need some help?  Austin Bank has a team of financial advisors who is focused on helping you pursue your financial goals.  From planning to save for your retirement to managing your financial portfolio, our team will work with you to develop a strategy.  Some of the services available include retirement planning; annuities; mutual funds; estate planning; life insurance; long-term care insurance; stocks and bonds and college funding.

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