5 Reasons to Start Your Financial Plan Today
It’s more than just saving money. Financial Planning works toward a goal and helps protect your financial life. Planning can mean a lot to your financial future, but it’s only as strong as the work you and your planner put into it.
The Power of Compounding
The power of compounding is your financial snowball. Investing in your future today can grow into a better retirement tomorrow.
Take, for example, an investment of $100 over a 30 year period at an 8% annual rate of return; you would have $149,035. If you delayed the $100 increase for ten years; you would have $58,902, or $90,133 less.
If you instead, chose to play the catch-up game; where you waited to start ten years later but insisted on still retiring in the same year. You would have to save over 2.5 times to get back to $149,035.
As the famous investor, Warren Buffet, once said, “Someone is sitting in the shade today because someone planted a tree a long time ago.” While increasing your savings rate by just a little might not seem like a lot, the power of compounding has the potential to make or break your financial future.
You’re already shipmates for life — but where are you heading? Planning a budget and maintaining financial stability can keep you out of troubled waters. Avoid the ruts and roadblocks that come along with late bills, past due payments and a poor budget.
Financial strengths and focus are not the same things. You can have a healthy income but if you inevitably spend more than you earn, well, the rest is history.
A flashlight, first aid kit and a bottle of water isn’t the only way to plan for an emergency. Build an adequate cash reserve and get the right amounts and types of insurance.
Balancing between the various types of insurance such as life, health, disability, long-term care, home, and auto can be a challenge. It’s somewhere between affordability and the right coverage that can help keep you financially stable.
An emergency fund can help you reduce your premiums and supplement your insurance planning needs. Disability policies, for instance, often don’t start until 90 or 180 days after a disability. A cash reserve can cover the gaps between the initial disability and when payments begin. Coordinating your cash reserve goal with your insurances can help you reduce your premiums and maintain your financial security.
Retirement, or financial freedom, should be an achievement in your life. Maybe you love your job, or maybe you want to quit tomorrow. In either case, getting to your financial freedom can give you that choice. Maybe the job you have is fantastic, but there are certain tasks you would rather not do. Flexibility, stability, and control are only a few of the benefits to having a sound financial plan.
The chance to do something that you’ve never done before. A new class, a job or life change are all possibilities that may require a financial change. Knowing if your financial life can handle both positive and negative changes can help keep you prepared.
Opportunities might not come often, but when they do, it’s best to have a financial plan. Beyond having a savings plan or emergency fund, having a financial plan can help you make decisions quickly and accurately.
There are so many great reasons to start planning. Tell us about your goals and reasons you should plan for them.