The right financial planning strategies are key to creating your desired financial lifestyle. However, the road to a comfortable lifestyle could be met with unforeseen hurdles. A change in your circumstances, like a loss of a job or being incapacitated, can put a dent in one’s finances. Without any type of financial planning strategy, achieving your goals can become challenging.
According to Jason Hare, President and Founder of Cornerstone Wealth Planning in Kingston, Ontario, there are some very basic steps you can take now to ensure financial stability and security for your family:
Why it’s important to have the best financial plan in place
Having a financial strategy makes it, at the very least, less problematic for individuals to handle money; and, believe it or not, it helps you to stay healthy. The good news is no matter what an individual’s current situation is, there’s plenty of opportunity to fix money problems and get back on the road to financial security. Here are some tips for achieving that:
Catch up with superannuation
Superannuation is a tax-effective way to build wealth and prepare for a comfortable retirement. Putting in more money to a super fund can make a lot of difference in the future.
Naturally, strategies for beefing up one’s superannuation vary depending on age, but here are some general recommendations:
- Check on an employer’s superannuation guaranteed contributions
- Consolidate multiple super accounts
- Identify ways to make extra contributions
- For those who fall under a specific income bracket, explore options for government co-contributions
- Check for insurance coverage for total permanent disability, death and income protection
- Explore available investment options
- Consider tax-saving strategies
- For those with spouses, consider making co-contributions
- Meet with a financial advisor to help you manage a plan
The good news is that no matter what an individual’s current situation is, there are plenty of opportunities to fix money problems and get back on the road to financial security.
Start working on a budget
Budgeting can play a vital role in managing your finances better. This can be empowering for individuals who wish to be more in control. The problem is that staying within a healthy level of spending is challenging for many because they find it difficult to calculate their expenses. These are some of the consequences of spending beyond one’s means:
- Missed payments can incur penalty fees and interest
- Weak emergency fund
- Bad credit report
- Undue financial stress
Financial professionals recommend having an emergency fund that’s at least good for three to six months. That way, unforeseen events like loss of income or unexpected expenses will have minimal impact on one’s financial ability. A recommended place to put emergency savings is a high-interest account that is easily accessible without fees or restrictions. It can be any of these four types: savings, checking, money-market accounts, and money-market funds.
Deal with your debt
There are two ways to effectively avoid the pitfalls of debt: avoid it in the first place or be on time with your payments. Debt can significantly impact your credit score, which can affect your future capacity to secure funding, like loans for homes, cars, etc., and that is why it’s crucial that debt management is included in the many strategies for financial planning.
Here are some tips on managing debt:
- Track daily spending to monitor cash flow
- Identify the essential expenses and set limits as to how much money should go into each one.
- Utilize the bucketing method so that each debt gets allocated with money during payday
- Pay off expensive debt first
- Consolidate debt
- Stay away from acquiring more debt
- Get professional assistance when you need it
Start with estate planning
As with taking measures to ensure retirement savings are in order, estate planning is included in the strategies for financial planning. This is key to protecting one’s wealth and ensuring that loved ones are financially secure just in case something happens, like when someone dies or becomes incapacitated and unable financial support. Professional estate planners can provide full assistance and ensure that an individual’s wishes are properly taken care of.
“Pairing up with the right professional that suits your needs is a necessary part of developing a sustainable financial plan,” says Kingstone financial planner Jason Hare. “I really recommend you don’t put off developing a financial plan, if you do, you can’t secure the future that you want for you and your loved ones.”