Every working adult, no matter what their age, should have a solid financial plan to guide them, but few of us get around to building this plan.
Every person has different financial priorities, and those priorities change throughout our lives. Regardless of your current age or stage of life, however, the idea of the balanced financial plan remains the same. It is important to see the balanced and solid financial plan as a three legged stool. The image of the three legged stool shows up again and again in financial planning, and for good reason.
The three legs of that stool consist of:
- Retirement/estate planning
Leg #1 – Budgeting and saving:
A realistic budget and savings plan is essential for an effective financial plan. Budgeting is essential to a solid financial future. If you have not taken the time to create a monthly budget, do it now. Until you have created a solid budget plan, you will be unable to get on with the rest of your financial plan.
The plan for savings goes in lockstep with the budget plan. Without a proper savings plan, your chances of saving enough for long term financial goals are slim indeed. Creating a solid budget plan, and finding the money you have been wasting, will help you save, and saving will help you plan your financial future.
Leg #2 – Investing for the future:
Many people are so intimidated by the subject of investing that they fail to invest for the future. Investing does not have to be intimidating; the key is to get started as early as possible. Once you know the basics of investing, it will be much easier to get started.
Leg #3 – Retirement and estate planning:
The third leg of the three legged financial planning stool consists of retirement and estate planning. While most of us dream of retiring some day, all too few of us take the steps that will be required to enjoy a comfortable retirement. It is important to take advantage of all the retirement savings options available to you, including 401(k) plans, Individual Retirement Accounts (IRAs), etc., to secure your financial future.
The estate planning portion actually sounds much more intimidating than it really is. Proper estate planning begins with a will and a revocable living trust. Wills are not difficult to create, and not expensive either. It is important for everyone, even the young to have a will.
Once you have brought these three legs together, you will be on your way to a solid financial future. It is important to start planning for your future as early as possible. The sooner you get started, the sooner your three legged stool will be rock solid and ready to support your financial lifestyle.