October is Financial Planning Month, a good time to reevaluate your financial plans and make adjustments to align with your goals. Whether you are preparing to buy a new home, planning for a home renovation, or even purchasing a second home, set yourself up for success with a sound financial plan.
Here are a few tips and tricks to help you get started creating your plan, or perhaps updating your existing financial plan.
Identify your goals.
Your goals should consist of a variety of short-term, mid-term, and long-term goals. The short-term goals should be immediate goals that are attainable, while mid-term goals will likely have more to do with preparing to buy a home, save for kids’ college, or maybe purchase a vacation home. For most people, long-term goals are focused on retirement and making a plan for long-term care.
Set a budget.
While setting a few goals is a great start, it doesn’t mean much if you don’t create a budget that will help you realistically attain those goals. This may require that you dedicate some time to tracking your spending before you are able to set a budget, but trust us, this is time well-spent.
Expect the unexpected.
A big part of your financial plan is ensuring that it is ready to handle the unexpected that life tends to throw at all of us. In addition to the college savings or the house fund, you will want to create an emergency fund that you can gain quick access to should something arise.
Save for retirement.
You can take a loan out to send the kids to college or to buy a home, but you can’t take a loan out to fund your retirement. So while it is a long-term goal, it better be on your radar from early on. Keep in mind that the sooner you begin saving for retirement, the better. When you start early, you can afford to put away less money per month since compound interest is on your side.
Keep your plan updated.
Once you’ve established your financial plan, it’s important to review it regularly and make any necessary adjustments. You will want to review your financial plan a few times a year and after any major lifestyle changes, such as moving, getting a new job, getting married, or having kids.
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