James Torres –
Life requires planning, and we all know how to do that. If you want to become a doctor, take a vacation or throw a dinner party, you make a plan; you figure out the steps to take and resources to use to achieve your objective. So why do so few of us make a financial plan? We all want to enjoy healthy finances, and yes, sometimes it can feel overwhelming. But it’s worth it. Create, follow and fine-tune a financial plan to keep you focused, driven and successful.
Identify Your Goals
What is it you hope to achieve? This is the first question a financial planner would ask, and this may be the first time you attempt to detail what you want and the direction you expect to take to get there. If you’re married, do this with your spouse, of course.
Use Tech Tools to Estimate Expenses
If one of your goals is to send a kid to college, College Savings Plans Network features a college-cost calculator to help you determine how much you need to be saving now. Looking to purchase a home? Zillow can help you determine the average selling price in the neighborhood where you want to live. CNN Money has a retirement calculator to help you figure out how much you need to be putting aside for retirement.
Establish a Timeline
Identify when you would like to achieve your goals. If your kid is going off to college next year, that goal gets priority. If you have 18 or so more years, move it down the list (but start saving now). Do you what to purchase a home? Determine when you can make that happen. And you may not know exactly when you plan to retire, but pick a date anyway. Better you start now.
Define Resources
Figure how much you’ll need to save each month to reach these goals. Don’t get overwhelmed; you can always make adjustments later. The important thing is that you have these in writing, and you and your spouse agree on where the money is going.
Talk about ways to bring in additional income to achieve your goals sooner. If you receive regular payments from a structured settlement or annuity, consider contacting an organization that specializes in purchasing your future payments for one lump sum now, such as J.G. Wentworth. Perhaps you could sell any stock you hold or take a second job for a while. Examine your monthly spending habits, looking for areas where you can change and trim to reach your goals sooner.
Apply Reality
Now you have your financial plan. It will require work, and you may have to wait another few years to buy a house or send your child to community college for the first two years. Whatever the situation, don’t lose sight of your plan, and don’t forget to update it when circumstances change.
James Torres
Journalist, finance geek, bookworm
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