Vacations should be fun and relaxing, so it’s important to carefully plan them in advance. Nobody wants to go on a hard-earned vacation and be uncomfortable or disappointed because of not planning well.
Financial planning is similar – nobody wants to fall short of financial goals simply because of a failure to plan. However, according to a survey by MyBankTracker.com, more than 50% of Americans spend more time planning their vacations than they do planning their finances.
Financial planning is an important task for everyone, at all ages and all income levels. Whether you are a starving college student, a newlywed starting your career or an empty-nester, you will want to have a financial plan to ensure you are achieving your financial goals.
The following are tips to help you enjoy the benefits of establishing a clear financial plan:
Define goals. Creating a financial plan requires you to write down your goals and create a path to attain those goals. This exercise will help you figure out whether goals are realistic or whether they should be modified. You may also realize you need to save more or spend less in order to achieve them.
Identify and avoid mistakes. Analyzing your income and expenses will give you a different perspective and help you evaluate the necessity of expenses. For example, you may realize you are paying high rates on credit card debt or paying for a monthly subscription service that you aren’t really using. In seeing the big picture, you can choose to cancel unnecessary expenses and put the savings toward paying off your debt.
Stay focused. Do you have dreams that seem too far-fetched? For example, have you ever wanted to take a year off and travel around the world? How about retire early? Want to build a dream home? Sometimes, achieving these dreams is not unrealistic, but they will require an eagle-eye focus. By creating a financial plan, you can create that day-to-day focus in order to make these lofty dreams a reality.
Be confident. When you create a financial plan, you will know exactly where your money is going each month. You will also know that you are covering your expenses, saving for long-term goals, and understanding exactly how much you have left over for those times when you would like to splurge a little. Then, you can splurge with confidence!
Develop a healthy money attitude. It’s easy to get caught up in the “keeping up with the Joneses” trap. By developing a financial plan, you develop a different attitude and different priorities. Rather than needing that new car when yours is just a few years old, you take pride in driving the wheels off of it before getting a new one. One interesting finding of a survey by the Certified Financial Planner (CFP) Board found that people with a financial plan are more likely to say they are living comfortably than those without a plan. In fact, 50% of those with a plan making between $50,000 and $99,999 say they live comfortably, compared to only 46% of those without a plan making $100,000+.
Mindset is often underestimated, but it is an important factor when it comes to financial peace of mind.
The best part of financial planning is that there are no disadvantages of coming up with a plan. Even if the plan is not perfect and needs to be modified down the road, it will still help you get closer to achieving your financial goals. Plus, financial planning doesn’t have to be a chore – you can get help from an investment advisor to make it easier and less time-consuming. That way, you will have more time to plan for the fun things, like that vacation to Tahiti. FBN
By Daniel Goodman
Daniel Goodman is a local investment advisor at WT Wealth Management located at 809 W. Riordan Road, Suite 206 in Flagstaff. You can contact Goodman for a no-cost consultation at 928-225-2474 or at DGoodman@wtwealthmanagment.com. You are also invited to join him for his financial planning workshop at 5:30 p.m., Nov. 19, at the NACET building 2225 N. Gemini Dr. Flagstaff, Arizona, 86001.