Financial Planning

What you need to know

Financial planning is the foundation you need to achieve your long-term financial goals and ensure financial stability for you, your family, and generations to come. Whether you’re just starting your career, planning for major life events, or looking towards retirement, having a solid financial plan is essential. Here are the basic factors to consider when putting together a financial plan that puts your money to work.

Set Clear Financial Goals

Why it Matters:

Setting clear financial goals provides direction and purpose to your financial planning efforts. Goals can range from short-term objectives like building an emergency fund to long-term aspirations such as buying a home or retiring comfortably.

How to Start:

  • Identify and prioritize your goals.
  • Make them specific, measurable, achievable, relevant, and time-bound (SMART).
  • Break down large goals into smaller, manageable steps.

Create a Budget

Why it Matters:

A budget is a powerful tool that helps you manage your income and expenses. It ensures you live within your means, save for future goals, and avoid unnecessary debt.

How to Start:

  • Track your income and expenses for a few months to understand your spending habits.
  • Categorize your expenses into needs (essentials) and wants (non-essentials).
  • Allocate portions of your income to different categories and stick to your budget.
  • Here’s a bit more about budgeting

Build an Emergency Fund

Why it Matters:

An emergency fund acts as a financial safety net, covering unexpected expenses such as medical bills, car repairs, or job loss. It prevents you from dipping into your savings or taking on high-interest debt.

How to Start:

  • Aim to save at least 3-6 months worth of living expenses.
  • Keep the fund in a high-yield savings account for easy access and growth.
  • Contribute regularly, even if it’s a small amount each month.

Manage Debt Wisely

Why it Matters:

Debt management is crucial for maintaining financial health. High-interest debt, such as credit card balances, can quickly spiral out of control and hinder your financial progress.

How to Start:

  • List all your debts, including interest rates and minimum payments.
  • Focus on paying off high-interest debt first while making minimum payments on others.
  • Consider debt consolidation or refinancing options if they offer better terms.

Save and Invest for the Future

Why it Matters:

Saving and investing are key to growing your wealth and achieving long-term financial goals. Investments can provide higher returns than savings accounts, helping your money grow over time.

How to Start:

  • Open retirement accounts like a 401(k) or IRA and take advantage of employer matches.
  • Diversify your investments to spread risk and maximize returns.
  • Consult a financial advisor to develop an investment strategy that aligns with your risk tolerance and goals.

Protect Your Assets

Why it Matters:

Insurance is a vital component of financial planning, protecting you and your family from financial hardships caused by unexpected events.

How to Start:

  • Ensure you have adequate health, auto, home, and life insurance coverage.
  • Review and update your policies regularly to match your current needs.
  • Consider additional coverage like disability or long-term care insurance if applicable.
  • Here’s a bit more about insurance

Plan for Retirement

Why it Matters:

Planning for retirement ensures you can maintain your desired lifestyle without financial stress. The earlier you start, the more you benefit from compound interest.

How to Start:

  • Estimate your retirement needs based on your expected lifestyle and expenses.
  • Contribute regularly to retirement accounts and increase contributions as your income grows.
  • Monitor your retirement savings and adjust your plan as needed to stay on track.
  • Here’s more details on the basics of retirement planning

Seek Professional Advise

Why it Matters:

Financial planning can be complex, and professional guidance can help you make informed decisions and avoid common pitfalls.

How to Start:

  • Find a certified financial advisor who aligns with your financial philosophy.
  • Schedule regular check-ins to review your plan and make necessary adjustments.
  • Stay informed and educate yourself about financial planning principles and strategies.

 

Financial planning is an ongoing process that evolves with your life circumstances and goals. By understanding the basics and taking proactive steps, you can build a solid foundation for your financial future. Start today, and remember that small, consistent actions can lead to significant financial success over time.

Ready to get started with the help of Rely Wealth?

DISCLOSURE: Investment advisory services offered through Rely Wealth Partners, LLC, a DBA of tru Independence Asset Management, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission. This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.

We work with highly motivated individuals and families who want to be financially complete and value clarity.

Daniel Mauser — Founder and Managing Partner