Thinking about your future finances is one of the best things you can do for yourself and your family. First, think about your current financial situation. Then you can look to the future.
You can set a budget to include future savings and investments. Use the “Manage your short-term income and expenses” flyer to help your current budget. The tips included in that flyer can help you save money for what’s discussed in this flyer.
This may take some serious soul searching. So don’t feel like you have to rush it. But keep a list of your long-term financial goals. You can decide how long into the future you want to plan. Maybe you’re planning for retirement. Or maybe you just want to plan for the arrival of your first child. But always remember that your choices now can help — or hurt — you in the long run.
You may think you can retire to your own personal island, but that’s probably not within your means. And you will probably make more money as you get older, but your expenses will also grow. Plan for the future with the present in mind. Don’t base your goals around wishful thinking. You have to be honest with yourself.
Set goals to save certain amounts of money by a certain date. But base those goals around what you can save now. If you do make more money in the future, you can adjust your goals accordingly.
Your long-term budget includes the amount of money you can save from year to year. You can put money aside on a month-to-month basis. But you should think about your long-term budget in terms of years.
Figure out how much debt you have. And figure out how long it will take before you can live debt free. The sooner you can pay off your debt the better.
Making minimum payments every month only increases the amount of interest you’ll pay. So paying extra every month can help you in the future.
Then add investments into your budget. This includes things like retirement accounts, college savings accounts, bonds and mutual funds.
Life always brings unexpected events. So put some money in savings to plan for such an event. It’s best to have at least six-months’ salary set aside for the unexpected. It may seem like a lot. But you can get there if you save a little bit at a time.
Learning about different investment options can be overwhelming. That’s where the professionals come in. An adviser can help you understand your options. And he or she can help you understand the risks that come along with some investment options.
The Investment Adviser Association (IAA) can help you learn more before you choose one. And the IAA can help you know what questions to ask the adviser.
Investment Adviser Association website: investmentadviser.org
