By Emily Weed & Brian Blakeman
Why Financial Planning Matters
Life is a tapestry of changes, from marriage and children to career shifts and unexpected challenges. Financial planning is dynamic, easily adaptable to these transformations, ensuring your financial map remains current and relevant. Here’s why financial planning matters:
Maximize Employer Benefits: Your employer offers many financial benefits spanning health insurance, life and disability insurance, retirement savings to stock, and deferred compensation for high income earners. A financial plan helps you maximize those benefits and ensure they are working together to achieve your goals.
Example: Utilizing your employers free estate planning tools and resources.
Goal Achievement: Financial planning helps you identify and prioritize your financial goals, whether it is buying a home, saving for your children’s education, or building a comfortable retirement nest egg. It turns these goals into actionable steps.
Example: Saving $20,000 for a dream vacation within the next three years.
Budgeting: Creating a budget is a fundamental aspect of financial planning. It allows you to track your income and expenses, helping you allocate resources efficiently and avoid overspending.
Example: Creating a monthly budget that allocates a specific amount for rent, groceries, entertainment, and savings.
Debt Management: If you have debt, a financial plan can help you develop a strategy to pay it down. Reducing debt is a significant step toward financial freedom.
Example: Developing a strategy to pay off high-interest credit card debt by making larger payments each month.
Emergency Preparedness: Life is unpredictable, and emergencies can happen at any time. A financial plan includes building an emergency fund to cover unexpected expenses without derailing your long-term goals as well as insurance.
Example: Establishing a dedicated emergency fund covering six months’ living expenses, consistently contributing to it through a budgeted savings plan, and setting clear criteria for fund usage.
Investment and Retirement Planning: A well-structured financial plan includes investment strategies that align with your goals and risk tolerance. It also ensures that you are saving adequately for retirement so you can enjoy your golden years comfortably.
Example: Investing a portion of your income in a diversified portfolio of stocks and bonds to build wealth over time.
Steps to Celebrate National Financial Planning Month
Here are some steps you can take to celebrate National Financial Planning Month and improve your financial situation:
- Review Your Finances: Take stock of your current financial situation. Gather information about your income, expenses, assets, and debts to understand your overall net worth.
- Emergency Fund: Ensure you have an emergency fund in place. Aim for three to six months’ worth of living expenses in a readily accessible savings account.
- Debt Management: If you have high-interest debt, develop a strategy to pay it down as quickly as possible. Consider consolidating or refinancing options.
- Invest Wisely: Review your investment portfolio and make sure it aligns with your financial goals and risk tolerance. Consider consulting a financial advisor for guidance.
- Save for Retirement: Contribute regularly to your retirement accounts, such as a 401(k) or an IRA. If your employer offers a retirement plan, take full advantage of any employer-matching contributions.
- Seek Professional Help: If you are uncertain about your financial situation or need help with complex financial matters, consider consulting a certified financial planner or advisor.
In summary, financial planning is not limited to the elite or those approaching retirement. It is a potent tool for anyone seeking to seize control of their financial destiny, manifest their financial dreams, and secure their future—the emerald-studded path to financial success. Emerald Advisors works alongside you to develop your financial plan and help you monitor throughout the year. Feel free to reach out to our financial planners to understand your financial plan and develop a roadmap for the next steps.