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Financial Planning You Should Know
Just like the seasons a year have, there are different seasons for financial planning throughout the course of a lifetime. Financial planning helps people to have 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.
Needless to say, different situations have unique aspects similar to the circumstances which you start implementing a financial strategy and age. Put it simply, the stages of financial planning compose of the following.
Number 1. Building assets – at the start of your career, accumulating assets is mostly the focus of your finances. 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 – you have the power to increase discretionary income as you become a more successful individual. At this stage, you should start planning and saving for your future goals like comfortable retirement and/or a child’s education. 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. You can start it off by thinking of your retirement dreams as well as goals and then, create a detailed plan to which can help you to get there. You want to be sure that you have the flexibility to take income in ways that are tax efficient which will allow you to keep enjoying your lifestyle 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 few months of enjoying retirement, it will be smart to reevaluate the plan you have just made and do any adjustments necessary to make sure that you are on the right path.
Number 5. Leave a legacy – as you become older and financial secure, leaving a legacy has become of paramount importance. Legacy is more on the impact you have made on charities, people as well as causes that matter to you. Apart from that, this also indicates that you’ve chosen the right beneficiaries to protect your assets.
Having legal and financial documents to be structured properly are extremely important to transfer your assets, regardless of what stage you are currently in financial planning.
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