If you don’t think your financial goals are too different from those of the general population, you might consider lifestyle financial planning. This can help you better understand your current financial situation and how your financial decisions can impact your future. It may be a good option for you if you feel like you’re in a financial rut.
Your financial plan will be a big part of your life. Are you prepared for what’s ahead?
The average American spends $50,000 before they die. That’s about $2,000 a day. What if you could now spend that $2,000 a day and retire by age 30?
It doesn’t matter if you’re young or old, making a million dollars a year or $1,000 a month, or having zero savings.
But the truth is, you need to start planning now.
The good news is that you can take five steps to start right now. This blog post will walk through each step and explain why you need to do it.
It’s common to hear that “lifestyle planning is important” when discussing money. What does this mean? To live a happy, successful life, we need to plan how we spend our time and money, what we eat, what we buy, how much we save, and what investments we make. When doing this, we also plan how to pay for the things we want or need.
What is financial planning?
Financial planning is assessing your current financial situation, setting goals, and implementing steps to achieve those goals.
This process is very similar to how an athlete prepares for a marathon. First, you determine your training goals. Then, you train to reach those goals. Next, you have competition.
If you’re reading this, you’ve already started the process. But if you haven’t, there are three important questions you need to ask yourself:
1. How much do I earn?
2. What am I spending?
3. Where am I putting it?
Suppose you answered “0” for any of those three questions. Congratulations! You’re already financially prepared for retirement.
The 5-step financial planning process
First, you need to make a list of all your monthly bills. Don’t forget to include any debt payments you’re making. Next, you must determine how much money you’ll need to save each month.
Next, you’ll need to calculate your retirement savings. Most people are surprised that their retirement accounts are probably only 5% or less of their total savings. To put it simply, most of us will never get to retire.
Next, you’ll need to decide where your money will go. You might want to invest in real estate, start a business, buy a car, pay off debt, or anything else.
Finally, you’ll need to create a plan to achieve your goals. How much of your retirement savings should you dedicate to each destination? What time frame are you looking to accomplish each goal? What steps can you take to reach your goals?
What are the different types of financial planning?
Financial planning is a broad term. Different types of financial planners help you prepare for various aspects of your future.
Some are purely for insurance purposes. Others are purely for investment purposes. Some are both.
The good news is that there’s an option for everyone. Here are some of the most common types of financial planning.
Income and Savings Insurance: This type of insurance can be a godsend if you don’t have enough cash to cover your monthly expenses. It pays out a lump sum in the event of your death, which allows you to pay off debts, take care of outstanding bills, or make investments. You can apply it toward your mortgage, car loan, or other large purchases. Regarding savings, it’s also worth considering how much you can afford to put away each month.
Types of financial planning
There are many different types of financial planning. Some are lifestyle plans you may need to prepare for when you’re older.
These include retirement, estate, and long-term care planning. Others are more specific, including insurance and tax planning.
There are lifestyle plans that are designed to help you achieve your short-term financial goals. They include budgeting, saving, and investing.
Finally, long-term plans are designed to help you achieve your long-term financial goals. They include retirement planning, estate planning, and long-term care planning.
Frequently Asked Questions About Lifestyle Financial Planning.
Q: What advice can you give anyone who wants to become financially secure?
A: Be responsible with money. Save, save, save! If you’re not careful, you can end up going broke.
Q: Where does the money come from in your life?
A: It comes from the things we purchase. I try to spend my money wisely. I would rather have something I can enjoy or use now than something I have to pay for later.
Q: What advice can you give someone wanting to start their own business?
A: Find something you are passionate about, and if it makes you happy, then pursue it.
Top Myths About Lifestyle Financial Planning
1. All of your retirement savings should be invested in stocks.
2. You should never borrow money to save for retirement.
3. A balanced portfolio contains equal amounts of stocks and bonds.
4. You will never be successful at money until you retire and your children are gone.
5. People should stop saving for retirement when they are young and invest in stocks.
Conclusion
This post was very helpful for me. I didn’t know much about lifestyle financial planning. Interestingly, it has been around for over 30 years, but there isn’t much information online about it.
I recommend looking into lifestyle financial planning for those new to it. It’s not just about having a ton of money and living like a king, although those things are part of it.
It’s about creating a plan to live well while you’re young. I think it’s an important topic because we live longer now than ever. We should learn how to live well as we age.
