This is a famous quote from both a U.S. President and a well-known Irish footballer! What both Ben Franklin and Roy Keane were trying to get across was the importance of planning in our lives. This is certainly true when it comes to your finances.
A financial plan can provide you with a comprehensive picture of your current financial affairs and can lay out a path to achieving your future financial goals. Reaching your financial goals probably won’t happen overnight. They may require budgeting, saving, investing and insurance to make them happen. Understanding how each fundamental of your financial plan will work toward achieving your goals will help you to commit to each step in the financial planning process.
Your Budget
Keeping a detailed written account of your money can allow you to see how much money you have versus what’s going out. Understanding how much money you have, what you spend it on and how much, if any, is left may allow you to make wise decisions about your spending and will allow you to identify areas to spend less and thus save more.
Reduce any short term debt
Shorter term debt tends to have higher interest rates associated with it. If you have any short term debt such as outstanding credit card balances or short term loans then you should consider paying down that debt as quickly as you can so you can start building up your savings.
Identify your key financial goals
While we all pass through similar life stages, the timing of those stages and the way we might like to experience life can differ from person to person. Some people are marrying later and having children later in life and from a financial planning perspective this can have implications for your retirement plans.
The earlier you plan for your key financial goals the better. The younger you start a pension, the more time you have to accumulate a sizeable fund and the younger you take our life insurance the cheaper the monthly cost will be.
Start Your Savings Plan
If you have identified from your budget how much money you have left over each month and you have cleared your short term debt then your next step is to start saving towards your financial goals. We never know what’s around the corner so it’s always a good idea to have some money put by for unexpected events. A rule of thumb is to have at least 3 months’ salary saved for emergencies.
Try and get in to the habit of putting away as much as you can each month. So instead of opening just one savings account, you could open a number of regular savers, each designed to help pay for things like holidays, new car, third level education costs and home improvements.
Insure What Matters Most
Taking out life insurance will be one of the best financial decisions you might make in your life. If you die leaving dependants behind, a life insurance policy could provide some financial security and allow them to help meet ongoing expenses.
Having some level of cover could prove to be invaluable in a time of need. None of us know what lies ahead and indeed no one really wants to contemplate their own death but if you can afford life insurance cover then you should at least consider what your death would mean financially for your loved ones.
The amount of cover that you might need depends on your own unique circumstances. Your cover need will incorporate debts such as your mortgage and should also include an ongoing sum that will help your family financially in moving forward.
Save towards your retirement
In the future, the state pension won’t start until age 68, so having your own pension plan is vital. Take a look at what you need to provide a decent standard of living when you hit retirement age. The state pension alone will only provide for a basic standard of living so if you are planning a more active retirement you will need to start saving now to make that happen.
It’s worth getting professional advice when it comes to something as important as your financial plans, so if you are reviewing your financial plans, get in contact with Con Friel & Company on 074 9121301, by email confriel@eircom.net or by contact form.
