Nov 20, 2018

Financial Planning Like a Pro

financial planning like a pro

You do not need to be a certified financial professional to create a financial plan.

But, you do need to know that creating and implementing a financial plan is critical to securing you and your family’s financial future. This doesn’t happen by accident. You need a roadmap to take you where you are today to where you want to be. Not sure where to start? Don't worry. Instead, read on to learn the simple steps needed to take the fear out of financial planning and do it like the pros.

What Is Financial Planning?

Contrary to popular belief, financial planning isn’t just for the wealthy or limited to estate planning.

Financial planning is telling your money what to do and when to do it to achieve specific financial goals. It doesn't matter if you’re planning to retire in 40 years, get married in the next 12 months, or pay off your student loan in 8 years – all of these are goals that require financial planning. Here are some typical ways financial planning can provide security for you and your family:

  • Establishing an emergency fund account to protect against a financial crisis 
  • Maintaining adequate life, long-term care, and disability insurance
  • Paying for your children’s education with a reduced emphasis on student loans
  • New home ownership (down payment)
  • Planning for a dream retirement

You need to have money available to cover routine expenses and unplanned events without neglecting the savings contributions required to reach long-term goals.  Failure to plan can keep you from living the financial life you dream about for you and your family. Wise money decisions made today increase the chances of a secure financial future.

What Is The First Step In Financial Planning?

To have a plan, you must first have goals. Otherwise, there's nothing to plan. Think about both long-term goals such as retirement and short-term goals like saving for a down payment on a home. Would you like to retire a millionaire by age 67? Is homeownership achievable in five years? How much money do you have to save each month for that to happen?

Action Step: Write down your financial goals.  Each goal must include a deadline. Example: Over the next five years, I will save $25,000.00 for a down payment on a home.

How To Make a Financial Plan

After you’ve determined your goals, it’s time to set aside money to achieve them. The foundation of any financial plan is a monthly budget. Figure your current monthly income and spending habits to determine what changes need to be made to ensure a percentage of your money is used to consistently support your financial goals. Money spent on unplanned splurges can delay or even derail your financial plan. A budget helps you keep spending in check and on the path to achieving your goals.

What Is The Final Step In Financial Planning?

The secret to an effective financial plan is the ability to modify the direction of the plan based on life’s milestones. One thing is for sure. Your financial plan will change over time. A plan implemented at age 25 will look different at age 35. During that ten year period you may have exchanged wedding vows, started a new career, expanded your family, or had other experiences that impacted your finances. During each of these life events, your plan will need to be updated. For example, having children may prompt you to invest in an Education Savings Account.

The path to a secure financial future will also undoubtedly contain detours and obstacles like an unexpected layoff or family illness, but a financial plan that’s reviewed regularly can put you back on track quickly. Action Step: Review your plan at least annually and make adjustments as needed. Would you prefer to receive personalized assistance with creating a financial plan? Hughes Federal Credit Union has certified financial professionals who can help you with your financial planning needs. Our professionals will help you select savings and investment options to support your financial goals.