If you have financial goals, whether they’re short-term or long-term, you need a plan to help you achieve them states AG Morgan Financial Advisors. That’s where a financial plan comes in. The components of a good plan vary depending on your objectives but typically include savings, investments and insurance, retirement planning and estate planning.
Start with a written plan
- Start with a written plan.
- Keep it handy and accessible at all times, so that you can refer to it whenever you need to.
- Review your progress regularly and make adjustments accordingly.
A savings account is essential to your financial plan, regardless of whether you already have one. The purpose of having money in the bank is to save for emergencies, or to use as cushion if you lose your job and need time to find another one.
Many people turn their eyes away from the future and focus on present needs only. But if you don’t consider what will happen when you’re no longer able to work, it could be a very unpleasant surprise when that day comes.
Investments and insurance
Investments and insurance are two of the most important components of a financial plan. Investments can be stocks, bonds, mutual funds, real estate or any other investment that is not cash or cash equivalent. Insurance can be life insurance, disability insurance and health insurance as well as home and auto insurances. In order to know what you should buy it is important to understand the different types of investments that are available so they can make an educated decision on what they want to purchase.
- Retirement planning.
- The importance of saving early and regularly, not just for retirement but for emergencies and other financial needs. If you don’t have money saved up for emergencies, it could be difficult to pay your bills when something unexpected comes up.
- The importance of having a mix of investments—some that grow more slowly but provide income (think bonds), some that grow quickly but aren’t as stable (think stocks), and some that are in between (think mutual funds). This way, your portfolio will have a balance between risk and reward, which means higher returns than if all your money was invested in one thing.
Estate planning can be one of your most important investments. It will help ensure that your assets go where you intend them to, whether in the form of a trust or as an inheritance for loved ones.
It is also wise to appoint guardians for your children should you die while they are minors, so they will not have to go through the pain and stress of losing their guardian at such a tender age.
A well-constructed financial plan can help you lead a more fulfilling life. By taking steps to get started now and building your plan over time, you’ll be setting yourself up for success in the future.