How to Create a Financial Plan for Every Phase of Life
A financial plan is like a roadmap for your money — without one, it's hard to know where your money's going or where it'll end up. That's why it's important to have a financial plan for every stage of your life. You can create one that meets your specific short- and long-term goals, then update it along the way as life happens.
If you don't know where to start, don't worry. A personal financial counselor can help at no cost to you. Once you have a financial plan, just stick to it and enjoy the path to financial freedom.
What's a financial plan?
The specifics of your financial plan will vary depending on your situation, but the basic concept is pretty universal: a financial plan evaluates your current financial state, sets goals for your future and makes a concrete plan for financial freedom.
What goes into a financial plan?
As you start creating your plan, consider how your financial needs will change through each phase of your life.
Meeting your current needs. Think about your current income and expenses. Before you can start planning for the future, make sure your current needs are met. Create and follow a spending plan you can stick to by adding up your current expenses and seeing how much money you can expect to have left over.
Addressing your existing debts. If you have credit card debt or loans, your financial plan should address how to pay them off as soon as possible to avoid paying any more interest than necessary. From your spending plan, figure out how much more of your income you can use to pay off your debts each month. Here are some tips for paying down your debt:
- Determine what kind of debt you have. Is your debt "good debt" or "bad debt?" Knowing which is which can help you figure out what needs to be paid down first.
- Never miss a payment. And always pay at least the minimum balance due each month.
- Work on paying down one credit card at a time. Start with the one that has the highest interest rate.
- Consolidate student loans. Combining your student loans into one loan can make it easier to manage the payments each month.
Learn more about strategies for financial planning and getting on track at the full article HERE from militaryonesource.mil.