Financial planning involves creating both long-term and short-term goals with your money and then developing actionable steps to meet those goals. While this may sound easy in theory, many people will find themselves no longer sticking to their plan or never making a plan in the first place. Anyone that is still on the fence about the importance of financial planning should take a look at these compelling reasons that it may be time to sit down and come up with a plan of action today.
Better Income Management
Whether you have a fixed income or are not completely sure about how much you and those under your roof will be bringing in every month, a little planning will stretch your income and make it more effective. Financial planning will often allow you to more accurately budget for those things that you know are coming every month. Even if your income is slightly less one month, you will know exactly how much you will need to save for upcoming taxes, mortgage, or any other expenses.
It Opens Up The Chance For Better Investments
As soon as all major debts are paid off, it is time for a family to begin considering their investment options. We talked with Lindsey Wealth Management about this subject and they said, “Without coming up with a long-term plan, simply placing an arbitrary amount of money into a retirement account or investment fund is ineffective at best. Everyone should be carefully looking at exactly what they can budget for their retirement so that they can better focus on making profitable investments.”
A Safety Net After Accidents
The average home has over $15,000 in credit card debt alone, but what happens when a medical emergency or natural disaster strikes? Even those with great personal health insurance could find that a serious car accident or major disease will push them well beyond their limits and they will either be paying out of pocket or using loans. Having at least some safety net in place will help to cover some or all of these expenses without having to go into further debt with even more interest accruing.
A Stress-Free Future
Worrying about your family’s financial future is eventually going to take a toll on your health and your sanity. Many parents are worried about how they are going to pay for their child’s college tuition or if they will ever be able to retire on time. Setting up a financial plan is a simple way for couples to get an idea about when these expenses are going to pop up and how they will be taken care of. The peace of mind alone is enough to make financial planning worth it for most families.
Improve Your Retirement Options
Nearly 20 percent of all Americans that are entering into the retirement age have not planned for it whatsoever. While one may hope that paying into Social Security for years on end will be enough, this is not the case anymore. These federally-backed safety nets are in a precarious position and many are finding that government stipends and retirement funds are no longer enough. Those that want to retire without sacrificing their standard of living need to begin planning for their financial future immediately.
There are too many variables in the world today for anyone to leave their finances up to chance. Without a solid plan, even those with a stable income could find themselves struggling after a single accident. Coming up with 1 year, 5 year, 10 year, and 20 year plans is a great way to take back control of your family’s future.
