Financial Planning You Should Know
During the course of a lifetime, there are different stages for financial planning much like the 4 seasons in a year. Financial planning helps people in having a better understanding of where you currently stand financially, how to plan for where you like to go and on how to prepare yourself for the challenges that might be ahead of you.
Needless to say, different situations have unique aspects similar to the circumstances which you start implementing a financial strategy and age. To make things simple, the stages that financial planning follows are the following:
Number 1. Building assets – at the very start of your career, your financial focus is most on accumulating assets. At this stage, the most valuable asset you have is your capability of earning income and therefore, investing in your career is so important. Also, it is important that you establish emergency fund, pay off student loans and build your personal savings.
Number 2. Invest for future – as you become a more successful person, so does your finances, which give you power to increase discretionary income. At this stage, you should start planning and saving for your future goals like comfortable retirement and/or a child’s education. Make sure that you also have tax diversified and well balanced portfolio to provide opportunities for potential growth.
Number 3. Planning for retirement – planning for your retirement should be your priority as you become closer to it. Start by thinking of your retirement dreams and goals and then after, make a detailed plan which will help you to get there. You want to be sure that you have the flexibility to take income in ways that are tax efficient which will allow you to keep enjoying your lifestyle while being prepared for unexpected retirement.
Number 4. Generate retirement income – you can now start to implement your retirement plan and enjoy the accumulated assets you have as soon as it is time for you to enter retirement. After months of enjoying life as how it is supposed to be, reevaluate the plan you have made and do necessary adjustments if needed for you to stay on the right track.
Number 5. Leave a legacy – as you become financially secured and grows older, leaving legacy becomes of paramount importance. The impact you have made on charities, people as well as causes that matter to you is going to be your legacy. In addition to that, it is about ensuring that you got the right beneficiaries to protect your assets.
Having legal and financial documents to be structured properly are extremely important to transfer your assets, regardless of what stage you are currently in financial planning.
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