Many may think that financial planning is only necessary for high net worth investors with complex needs, but the reality is that a financial plan is something that can help anyone, not just the rich. And your workplace may be able to help you get started.
The point is that if you have a source of income, you always decide what to do with it: – what you will spend it on (groceries, rent or mortgage, clothes), how much to save. Financial planning simply means having a well-thought-out strategy that helps you achieve long-term goals while meeting short-term needs. Many employers offer benefits that can help individuals connect with coaches, advisors, or financial tools to create a personalized financial plan.
Recent events have highlighted the importance of staying on track financially and preparing for the unexpected, as well as the stress that can result when we don’t. The Lending Tree Pandemic Money Survey found that 42% of Americans said they mourned over their financial situation during the COVID-19 outbreak, but only 18% made a plan to tackle the problem.
Just as it is impossible to build a skyscraper without a plan, we all need a detailed plan to build a financial framework that not only meets our daily needs, but also to lay the foundation for the future we envision. . Creating a practical and achievable financial plan is your first step.
Morgan Stanley research has found that most investors care about being able to cover their financial needs throughout their lives, maintain or improve their standard of living, and be able to cover unforeseen medical costs. But each also has unique priorities. What matters most to you: taking care of your loved ones, buying a house, preparing for your retirement? Maybe it’s all of the above, and more. Whatever your current financial situation, a financial plan can help you see new possibilities and take charge of your future by implementing new tools and behaviors.
This is why many companies now offer financial planning support to their employees. This can take the form of financial coaching, strategy or advice to help you identify and move towards your financial goals. Find out if your employer offers access to a financial planning app or website, investment basics training, emergency savings matching contributions, or student debt repayment programs. Together, these workplace benefits can help open the door to a stronger financial future.
Research from the Brookings Institution shows that only a third of Americans are truly financially healthy. Half are only adjusting, while almost one in five is financially vulnerable, which means they grapple with almost every area of their financial life.
To start taking control of your financial future, map your entire financial picture, which includes all of your debts (don’t forget the interest rates) and your sources of income. Two simple tests: Do the math to find out if you have six months of emergency savings, and use a basic retirement calculator to see if you’re on track to meeting your future needs. This snapshot can help highlight some of your basic financial strengths and weaknesses.
No matter where you are, a way to put yourself on a stronger footing is to create a goal and work on it step by step. The key is to make your goals specific, measurable, action-oriented, realistic and time-bound (SMART):
- Specific: You can’t achieve a goal if you don’t know exactly what it is. For example, instead of saying you want to “save more money,” target a specific amount, like $ 100 more per week.
- Measurable: The goal should be something that you can follow. A goal of saving an additional $ 100 each week is something you can watch over time.
- Action oriented: Define what you will do to reach your goal. For example, to save $ 100 more per week, you can cut your budget to find $ 100 more each week or a freelancer next door.
- Realistic: Is your goal achievable? If saving an additional $ 100 per week turns out to be too much, you may need to adjust the goal to $ 50.
- Limited in time: Every financial goal should have an expiration date, so you know where you are in terms of progress. When the time is up, you have a clean slate to reassess and set a new goal.
With this type of process, you can begin to develop a practical financial plan that reflects your goals and priorities. And if your benefits can get you started, you’ll have a head start.
Creating a financial plan is a fundamental but necessary step in securing your financial future, and the support you can access through your workplace can make the difference between still struggling and achieving your goals.
Whatever your financial dreams are, your path to success will require patience, diligence, and careful planning. Don’t expect to reach your final destination overnight, but the sooner you get to grips with the workplace resources available to you and use them to create a thoughtful financial plan, the smoother your trip will likely be, no matter what. that life has in store for you.