Everyone Needs A Financial Plan
BOSTON (CBS) - The Federal Reserve Board's 2013 Survey of Household Economics and Decision Making found that many households are not adequately prepared for retirement with almost half of adults not actively thinking about financial planning for retirement.
The financial choices in our lives are overwhelming. Once upon a time, people's financial lives were simple. Not anymore! There was one kind of mortgage, you had a savings account, no credit cards and if you wanted to buy stock you paid an 8% commission through a broker.
Today everyone should consider having a financial plan. The Financial planning process can easily be broken down into five simple steps.
- What do you want? These are your goals.
- What have you got? This is your net worth.
- Saving and investing to get what you want.
- Managing the obstacles you will encounter along the way.
- Protecting the people you love and the assets you have accumulated.
Let's start with what you want, the first step. The big picture here. What do you want to be doing in 5, 10, 20 years? Where do you want to be living? What kind of job? Retired? And as grown-ups there is a dollar component to all of our goals. Remember, a goal is a dream with a deadline.
Your number one financial goal should be a comfortable retirement. But often times buying your first house, having children and credit card debt put retirement planning on the back burner.
Make out a list of your goals. By writing them down you stimulate a part of the brain called the reticular activating system. This system triggers a filtering process that begins collecting information and routes it to the conscious part of your brain. Next, what's the time horizon for each goal?
Now prioritize the list. What is the most important goal? What you have now is an outline of your financial plan. Now fill it in. How much will you need to save? Where will the money come from? Do this with each item on your list.
Money Conference Alert!!
On October 11th I will be the key note speaker at The Money Conference which is a FREE one-day event presented by The Office of Massachusetts State Treasury. It will be held at UMASS Boston and the first 500 registrants will get a free copy of my newest book, Money, Your Personal Finance Guide.
There will be afternoon classes on everything from budgeting to buying a house. The Financial Planning Association of Boston will have volunteer financial planners there to help answer questions. You can set up a meeting with a Money Mentor when you register. If you have questions about the conference, contact Sheila O'Loughlin of the State Treasury at (617) 367-6900 ext 615.