How to Begin Financial Planning
Ideally, financial planning should begin around the time of your first job. However, with a solid plan, you can start planning at any age. With a real desire and diligent effort, basic financing planning can be achieved by anyone who is willing to make smart decisions when it comes to their financial future.
- Set-up a monthly budget or spending plan. When it comes to your financial future this is the single most important component to your success. Consider a budget worksheet or software program to assist you with completing this step.
- Set realistic financial goals that are catered to your specific financial state and future plans. As you progress along your financial pathway, you can begin to set more long-term goals. For example, if you are currently renting a home, plan toward the purchase of one. If you have small children, plan to the save for the college education. The options to plan are literally limitless.
- Use each of your goals to help determine your financial planning. If the purchase of a new home is your goal, start saving for the down payment and include this amount into the savings category of your monthly budget.
- Join a employer-sponsored retirement savings plan. All of your contributions are withdrawn from your paycheck; depending on your specific plan the employer will match your contribution. You may also want consider saving money in a Roth IRA, which is an excellent option for tax savings benefits.
- Utilize a sinking fund to assist you in planning ahead for any large expenses, like the purchase of vehicles or home. For example, if you want to purchase a new vehicle every five years, save enough money each money to meet the price of the vehicle and you'll never have to spend money on financing.