Personal Financial Planning

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Personal Financial Planning

Financial planning is the process that can help you pursue your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.

The financial planning process

Developing a comprehensive financial plan and putting it in place generally involves the following steps:

  • Take account of your income, assets, regular monthly expenses, and liabilities; evaluate your insurance, your investments and savings, and your estate plan
  • Establish and prioritize your financial goals and set a time frame for each
  • Identify areas of financial concern and financial strengths
  • Monitor your plan and make adjustments as your goals, time frames, and circumstances change
  • Use the services of financial professionals who have the expertise necessary to provide objective information and help you implement your plan results
     

Set and prioritize financial goals

Determining financial priorities and goals is ultimately the responsibility of you and your family. Start by making a list of your short-term goals (e.g., new car, vacation) and your long-term goals (e.g., home purchase, child's education, retirement). Then try to prioritize those goals. How important is each goal to you and your family? How much will you need to save in order to reach each goal? Once you have a clearer picture of your goals, you can work toward establishing a budget that can help you pursue them.
 

Establish a budget

Creating and maintaining a budget may not only help you target your financial goals, but regularly reviewing and updating your budget can help keep you on track. To develop a budget that is appropriate for your lifestyle, you'll need to identify your current monthly income and expenses. Start by adding up all your income. Next, add up all your expenses. It helps to divide them into two categories: fixed expenses (e.g., housing, food, clothing, and transportation) and discretionary expenses (e.g., entertainment, vacations, and hobbies). You'll also want to make sure that you have identified any out-of-pattern expenses, such as holiday gifts, car maintenance, and home repair. Once you've added up all your income and expenses, compare the two totals. If you find yourself spending more than you earn, you'll need to make some adjustments. Look at your expenses closely and cut down on your discretionary spending.
 

Tips to help you stay on track

  • Stay disciplined: Make budgeting a part of your daily routine
  • Distinguish between expenses that are "wants" and expenses that are "needs"
  • Avoid using credit cards to pay for everyday expenses: It may seem as though you're spending less, but your credit-card debt may continue to increase

Investment and insurance products are: not FDIC insured; not guaranteed; and, may be subject to investment risk, including possible loss of principal.

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