The month of October is National Financial Planning Month, and it is a time for everyone to review their financial situation and make a plan for the future. There are many ways to pursue financial independence.
In this article, I will share 7 of those tips on how you can get started with financial planning today!
The mindset of a lifestyle of financial wisdom
A financial mindset is one of financial wisdom. It is the mentality of how you think about financial decisions you are faced with. A financial lifestyle involves financial habits, attitudes, and plans that can help you be more financially stable.
The financial mindset of the successful may be to live below your means and save for a financial future. You can do this by avoiding debt, living within your budget, and spending only on things you need not want.
There an anonymous saying that goes like this:
“The wealthy can stay wealthy by living like they’re broke. Broke people often stay broke by living like they’re wealthy”.
There is no minimum age to start financial planning
The financial decisions you make now can lead to financial freedom later on. It is never too early or too late to start financial planning, and even young kids can begin learning about financial responsibility by saving some of their allowance money – no matter how small the amount!
Even if you’re just starting out, make a financial plan anyway – they’re not just for adults. Take note of financial goals you have in your financial plan, and prioritize them. Find an independent financial planner who can help give financial advice on what steps to take next with financial planning based on your current budgeting status. It’s actually kind of fun.
Financial tip for young adults: credit cards
Young adults should also learn about financial responsibility, which is why I recommend that they start by focusing their attention towards credit cards. If you use your credit card properly, it can help build financial stability. Find credit cards with low interest rates and also look for credit cards that have the best benefits of cash back rewards programs.
What are some financial secrets that successful people do? They automate their finances to make sure they stay on track with financial planning for future goals. Successful individuals also focus on investing in order to pursue financial freedom, but they ensure that they are educated on financial planning before making financial decisions.
Saving money is a great start, but planning to reach your financial goals is even more important.
Very young kids can begin learning about financial responsibility by saving some of their allowance money. But, as kids get a little older, and into their teenage years, it’s a great time to start making a plan for finances.
For example, having enough money to go to the movies, or budgeting for gas money require some amount of financial planning. If you just ask your parents for money every time you need it, then you could be missing out on one of life’s important lessons – learning how to be financial independent.
Financial planning is part of a mindset as mentioned above. If you learn it at an early age, you can carry it with you for the rest of your life, and the best time to start is…you guessed it, now. If I’ve said it once, I’ve said it a thousand times; it’s never too early or too late to start financial planning.
Having a written financial plan
One of the biggest financial secrets that successful people have is financial planning. If you have a financial plan to work from, then financial decisions will be easier. Using an independent financial advisor early on can help you start a financial plan based on your current financial position.
A financial plan allows you to create financial goals for the future, prioritize them, and use that list as a guide on what to do next. With this method of financial planning, it becomes easier to make financial decisions because there is less room for confusion based on having clear financial targets at the end.
Take advantage of tax planning
Those who have accumulated a significant amount of wealth often do so by being proactive and strategic about tax planning throughout their life.
Taxes are inevitable, but paying too much in taxes is not always necessary. Here are some examples on how to save a little on taxes:
Utilize your retirement fund. Contribute as much as you can to your retirement account. Not only will this help reduce the amount of taxes owed, but it also helps grow and compound money for financial security in later years.
Understand how income is taxed. Consult a financial planning professional and tax advisor to fully understand which types of income are taxed at different rates so that you maximize deductions.
Maximize tax deductions. In conjunction with your tax professional, independent financial advisors often recommend that their clients take full advantage of all possible deductions which can include mortgage interest, health insurance premiums and charitable contributions.
Invest for income now. Consulting with a financial advisor can help you to fully understand which instruments can provide for income now. Talk with your tax advisor so you can also understand which types of income are taxed at different rates to potentially maximize deductions.
Humanity Wealth Advisors and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.
Contribute to a Roth IRA
Contributing to a Roth IRA can be an excellent financial planning strategy not just for the wealthy, but for anyone. It’s also one of the simplest financial instruments to use.
Plan for risk management
One can utilize insurance to protect from unforeseen circumstances. This includes having insurance policies for their
cars, homes, and health in case of an accident or illness. They may also have a certain amount of cash earmarked for emergencies, so investments would not need to be liquidated.
Here are the simplest steps I can think of to start risk
- Make a financial plan
- Have the right type of insurance
- Be prepared for unexpected expenses
Risk management planning is important because it can help you feel more secure by knowing that if you lose your job, get sick, or injured, there are ways to insure against unexpected life events. It can give you confidence and help reduce stress levels which can contribute to better mental health overall.
Who is helping you pursue your goals?
We all know that planning for retirement is important, but it’s also hard to get excited about.
Financial planning and investing should be fun and exciting, not a chore. That’s one of the reasons why I created Humanity Wealth Advisors; to help people with their financial goals by using a more human-friendly approach.
It turns out that when you make something like financial planning fun, more people actually do it! Humanity Wealth Advisors has helped clients plan for the future and has helped many others pursue their dreams better than they ever thought possible.
Our independent financial advisors are here to provide financial advice on your investments so you can make informed decisions about your future without getting bogged down in complicated jargon or confusing numbers.
You’ll have access to an entire team of professionals who will work together seamlessly to give you personalized fee-based financial advice based on what’s right for you.
Financial Planning Month is a great opportunity to monitor your long-term finances. Your finances are very personal, and trusting an independent financial planner professional is essential.
Some final notes
Investing involves risk, including possible loss of principal. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information and opinions posted on this website do not necessarily reflect the opinion of LPL Financial or its affiliates.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.