Proper financial planning is just as important to your personal life as it is for a big Wall Street investment firm. Whether it’s for an individual or business, the difference between success and failure will depend on coming up with an effective strategy and following through with your plan. Unfortunately, strategies to manage your money will change as you move into various stages of life. To effectively plan or the future, it’s important to be to understand these different stages if you want to be successful and reach your goals.
Early Adulthood: Starting out on your own is probably the most exciting time of life; we learn the most, but we also make the most mistakes. One area that is often neglected at this stage of life is financial planning. Many young people end up with large amounts of debt from poor spending habits and lack of self-control. Some debt is hard to avoid, like student loans; while other debt should be easy to limit (ie: credit cards). Establishing a budget is the key to keeping debt under control. Accumulating too much of any type of debt can make it difficult to move into the next stage of home ownership, buying a new car or even securing a new job.
Becoming a Grownup: The next planning stage will involve more adventures, people and decisions. This is the time when a stable financial structure, consistency and commitment are vital components for successfully juggling a mortgage, auto loan, home maintenance and the myriad of small and large expenses that come with building for the future. Once a plan has been established, it’s time to begin putting away for the future. This is the stage where you’ll begin investing in a 401k or other retirement plan. Even small amounts will add up and the sooner you begin the larger your return will be when you retire.
Saving for Retirement:This stage typically doesn’t begin until the kids are gone and you still have a few more good years of employment left. This is the time to pay off the mortgage and other loans and seriously invest in diverse ways to secure the money you’ll need for financial security and a happy retirement.
Living on Investments: This is the ideal conclusion to your hard work and effort in responsibly managing your money. Just knowing that you won’t have to rely on a government check for retirement is reward enough in itself. But just because you’ve reached your goal doesn’t mean you should stop planning. People are living longer, health care expenses are rising and an unexpected problem could arise at any time.
Every stage and every life brings its own set of challenges. Although many people manage their finances on their own, don’t be afraid to ask for help! Hiring a professional could save you time, money and lots of stress…
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