Life-Planning Considerations: How To Work Toward Long-Term Security
Many people have a general sense of what they want to accomplish in life in terms of long-term goals, but not that many take the time to put together a plan to make it happen. Life and financial planning can be overwhelming to tackle, but experts indicate that some time invested early on in adulthood can reap significant benefits down the road. Following are some tips and strategies that people can use to hit their goals and ensure that their families are protected.
Take stock and set goals early on in the planning process
One of the best ways to initially tackle life planning is to take stock of one's current financial picture and set some goals. Every family will have different long-term goals, as some prioritize retirement savings and paying for a child's college education while others focus on vacations, housing in a safe environment, or other lifestyle metrics. Regardless of where one wants to be down the road, analyzing current spending patterns and formulating a budget and plan is an important place to start.
As Bankrate details, spending some time tracking spending, for a month or even a bit longer, is a great place to start when it comes to formulating a long-term plan. PC Mag shares their top picks for some of the best tracking and budgeting options available, noting utilities like Mint, Quicken, and OfficeTime as useful options. Some people like to utilize applications that they can put on their smartphone, while others prefer computer-based programs or even old-school paper and pencil systems. The key is to start documenting where one's money is spent every month and then build a plan of how to cut out unnecessary spending and apply funds toward savings or investments to accomplish long-term goals.
Experts share via Investopedia that while finding a balance in saving versus spending can be tricky, aiming to put away at least 10 percent of one's salary is a good starting point. While this may not always be achievable, it is a good percentage to strive for as a minimum and aiming for this can provide the opportunity to look at spending, cut out frivolous purchases, and budget for the long-term.
Utilize employer-provided resources and opportunities for tax advantages
In terms of long-term planning and building reserves, a 401(k) plan is a popular way to start saving for retirement. Many employers offer plans where employee contributions are matched to some degree and the money is contributed pre-tax. Then, the taxes are paid when the money is taken out of the account down the road. Those who are anxious to plan long-term to cover a child's college expenses may want to consider a 529 plan, which is another opportunity to save money pre-tax and utilize it later specifically for higher education costs.
Options that may seem somewhat less obvious when tackling life planning are things like disability and life insurance. These policies may not seem necessary to a novice just starting out in the planning process, but they can be lifesavers down the road in the case of an unexpected life event. Many employers offer access to these policies with minimal investment, and starting them sooner rather than later can provide significant advantages in terms of access and cost.
Should a financial planner be involved?
Many people find it helpful to reach out to a financial planner in the early stages of creating a long-term plan for financial success, and the Balance notes that asking for referrals from relatives or friends is a great way to connect with someone who will be a good fit. A financial planner can help nail down one's goals, analyze the current situation, and then shape and implement a plan for success.
There is plenty one can do on their own in terms of tracking spending, utilizing long-term savings and support resources, and pinning down a balanced budget, but sometimes it is helpful to also reach out to a professional who can add some experience and guidance to the mix. The early stages of working on life and financial planning can feel complicated, but the effort will be worth it down the road when it sets the stage for long-term success.
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