Plan for Financial Wellness
What does it take to achieve financial wellness? A clear view of your goals ‐‐ along with a solid plan for reaching them and the self‐discipline to follow through. Think of all the ways your efforts could benefit you and your loved ones. Money for emergencies. A college fund for your kids. A comfortable retirement. Financial wellness may lead to all of these things and more.
Start on the path to financial wellness by defining your goals and establishing time frames for reaching them. You may need money for some goals relatively soon. Other goals may be many years in the future. Having funds available when you need them is what financial planning is all about.
Next you’ll be ready to figure out how much money you may need for each goal and how much you’ll be able to set aside each month. A budget is a great tool that can help you set spending priorities and make decisions about what’s important to you. Knowing how much money comes in every month ‐‐ and how much goes out ‐‐ lets you take better control of your finances.
Setting aside money in an emergency fund can help you pay for unexpected expenses, such as car repairs, without having to run up your credit card or dip into long‐term savings. The rule of thumb is to save at least three to six months’ worth of living expenses in an account that gives you easy access to your cash.
If you have children, college funding may be an important financial goal. Saving for a child’s higher education expenses at the same time you’re saving for retirement and trying to enjoy life may seem impossible. But don’t neglect your retirement savings. Financial aid or part‐time work can help your child pay for college, but funding your retirement is up to you.
Your financial plan should include safeguards to protect your loved ones. Disability and life insurance can replace your income and help your family maintain its standard of living if you become disabled or die.
You may think estate planning is for only the very wealthy. But preserving your assets and passing your property to the individuals you want to have it are important financial planning goals for everyone. A will is the most basic estate planning document. Your estate plan also may include other strategies, such as using trusts and life insurance.
You’ll probably need more money for retirement than for any other goal you have, so it’s important to start saving early in your career. Contributing to an employer’s retirement savings plan or individual retirement account can help you build your nest egg.
Your financial wellness is mostly up to you. Focusing on your finances now can help you reach all the goals you’ve set for yourself.