FINANCIAL
PLANNING
Just like how a house
needs a strong foundation to withstand the elements, one needs to have a solid financial
foundation. Creating our financial foundation requires that we have the basics
covered. Here's what we need to know.
Budgeting
At the very basic level of personal finance we are dealing with
a budget; we make money and then we spend that money. Even if we haven’t
created a detailed and written budget we continue to budget on a daily basis.
When we are faced with spending money on something we think about it and
realize that by spending that money we will not be able to spend that same
money on something else.
Once we can see the inflows and outflows of our money we can optimize our spending so that necessary items are sure to be covered while cutting back on wasteful spending that will allow us to save money.
Once we can see the inflows and outflows of our money we can optimize our spending so that necessary items are sure to be covered while cutting back on wasteful spending that will allow us to save money.
Cutting Expenses
After creating a budget we
should begin to see where expenses may need to be reduced in order to meet our
goals. For some people this means eating out less and for others it could mean
getting rid of that extra vehicle. Whatever the case may be, everyone has an
area or two where money can be saved by reducing some basic expenses.
Insurance
Insurance is important
because we have worked hard to build a solid financial footing for us and our
family so it needs to be protected. Accidents and disasters can and do happen
and if we aren’t adequately insured it
could leave us in financial ruin.
Some insurance policies are required and everyone should have these types of coverage but there are many other types of insurance policies that are probably not needed and we could be wasting precious bucks that could be put to work elsewhere. There is a fine line between having enough insurance and being over-insured.
Some insurance policies are required and everyone should have these types of coverage but there are many other types of insurance policies that are probably not needed and we could be wasting precious bucks that could be put to work elsewhere. There is a fine line between having enough insurance and being over-insured.
Saving for Retirement
Retirement savings needs to become a priority instead of an afterthought. The Internal Revenue Service has made saving for retirement even more attractive with special tax-advantaged accounts such as employer 401(k) plans, individual retirement accounts and special retirement accounts for the self-employed. These allow for tax deductions, credits and even tax free earnings on retirement savings.Whether we are just out of college and have 40 years until retirement or we plan on retiring next year it is never too late to plan and to maximize your retirement savings.
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