Financial Planning You Should Know
Just like the 4 seasons in a year, there are also different seasons for financial planning throughout the course of your life. Through financial planning, it helps people on having 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.
Basically, different situations call for unique aspects such as 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 – accumulating assets is mostly the focus of your finances at the start of your career. At this stage, the most valuable asset you have is your capability of earning income and therefore, investing in your career is so important. Aside from that, it is important that you establish emergency fund, pay off student loans and build your personal savings.
Number 2. Invest for future – as you grow to be a more successful individual, so does your finances, giving you power to increase discretionary income. You have to plan and save for your future goals similar to comfortable retirement and/or a child’s education at this stage. To be able to have opportunities for potential growth, make an effort to have a tax diversified and well balanced portfolio.
Number 3. Planning for retirement – as you are nearing in your retirement, planning for it becomes your priority. Start by thinking of your retirement dreams and goals and then after, make a detailed plan which will help you to get there. You have to be certain that you are flexible to take income in ways that are tax efficient as this is going to help you enjoy the lifestyle you have until your retirement while being prepared for unexpected retirement.
Number 4. Generate retirement income – by the moment that it’s time to enter retirement, you may now begin implementing the retirement plan and enjoy the assets you have accumulated. After months of enjoying your retirement, consider reevaluating the plan you’ve made and do the necessary adjustments if needed for you to stay on track.
Number 5. Leave a legacy – leaving a legacy becomes paramount importance as you become older and financially secured. The impact you have made on charities, people as well as causes that matter to you is going to be your legacy. Apart from that, this also indicates that you’ve chosen the right beneficiaries to protect your assets.
Regardless of what stage you are currently in financial planning, having legal and financial documents to be structured properly are so important to transfer your assets.