Provided by Terry Garland and written by Indigo Marketing Agency, a non-affiliate of First Allied Securities, Inc.
Chances are you have some new goals you plan on going after in 2019. Perhaps your main goal is to improve your physical health by fine-tuning your diet and adding a new exercise routine. Maybe you’re focusing more on improving your emotional well-being and strengthening relationships in your life. Or maybe your focus is set on taking your career to the next level this year.
These are all worthy goals, however, we would like to remind you to include one key goal that many overlook: setting up your financial plan. For most, it’s one of those things you know you should do but keep putting off. So why not make 2019 the year you finally get this key aspect of your financial security taken care of? After all, having a solid plan in place is a vital first step toward achieving any goal, including your financial goals. Here’s how you can get started.
1. Create Your Budget
This seems elementary, however, it is such common sense that it is often overlooked by many. The foundation of any financial plan is knowing exactly how much you earn, how much you spend, and what you spend it on. So your first step is to record everything you spend for at least three months (the longer, the better). This can be done by carrying around a small notebook, entering your expenses into a budgeting app on your phone, or automating the process with a service like Mint. You can even check with your bank to see if their app has one of these tools built in. At the end of three months, calculate your average monthly spending for various categories (food, entertainment, utilities, clothes, gas, recurring bills, etc.). If you’ve never done this before, I bet the results will surprise you!
2. Set Financial Goals
Now that you have a clearer picture of where you are now, it’s time to define where you want to be in the future. When would you like to retire? What level of luxury are you planning to live in? How much will you need in your retirement account to afford this quality of life? And while retirement is a big part of financial planning, it is important to include all of both your short-term goals and long-term goals. Do you want to move into a new lake house in 10 years? Pay for your children’s education? Donate to charities? Write it all down and make sure your plan is set to help you achieve all your goals.
3. Design A Savings Road Map
Once you’ve defined where you are now and where you’d like to be, it’s time to make a plan to bridge the gap. Assuming an average income and return on your investments, how much do you need to put away each month to reach your goals on time? Does your budget allow for this? If not, what steps can you take to either reduce your monthly spending or increase your monthly income?
4. Put Together Your Portfolio
Unfortunately, stockpiling your savings under your mattress won’t get you very far. The key to achieving your financial goals is creating an investment portfolio strategically diversified to meet your personal needs. The earlier you get this started, the more you’ll benefit from the exponential power of compound interest.
5. Define Your Exit Plan
The last part of your plan is creating exit strategies for each goal. You need to be able to access your money when you need it. If you skip this step and just dump all your savings into retirement accounts, you’ll be in for an unpleasant tax surprise when you want to pay for the aforementioned lake house or college education. So keep in mind when you’ll need to access your money and how to set up your portfolio accordingly.
6. Schedule Check-Ins
Once you’ve set up your plan, you’re well on your way, but your work’s still not quite finished. Just as important is taking the time to periodically maintain. You’re bound to experience many life changes between now and retirement, and you must adjust your plan accordingly. Check-ins are easily brushed off and forgotten, so it’s best to schedule them into your calendar. As a simple rule of thumb, we suggest you aim to review your progress every six months or whenever your life situation changes (income change, change in expenses, change in goals, etc.).
As you can see, getting your financial plan in place is simpler than you may have thought. However, while a tried-and-true process can make it simple, it does not necessarily mean it’s easy. You may quickly find yourself hung up on the details and become quite overwhelmed. Fortunately, we are professionals who are ready to help you through every step. Our team members here at Golden Capital Management are experts in designing personalized financial road maps to help people achieve their goals. If you’d like to learn more about how we can help you set up your financial plan, call us today at (515) 226-0115 or email firstname.lastname@example.org.
Terry Garland is the founder and CEO of Golden Capital Management with more than 25 years of industry experience. He works with individuals, small-to-medium-sized businesses, and medical professionals, including physicians and dentists, allowing them access to a wide variety of specialized services and investment vehicles to fit their specific needs. He graduated from Drake University and attended the Wharton School at the University of Pennsylvania and is a certified wealth strategist and a registered principal. With offices in Des Moines, Iowa, and Carlsbad, California, he serves clients across the country. Learn more by connecting with Terry on LinkedIn.