Financial planning is something we all need to do, yet so many of us put it off, assuming that we’ll get around to it at a later date. While you may well be earning a decent income, there’s no guarantee that it will afford you financial stability in the future – especially if something unexpected happens to you or a loved one, such as losing your job, getting ill or injured, or even passing away. The good news is that it’s easy to make simple changes that will help you feel better prepared for whatever life throws at you – here are some tips on how to get started with financial planning.
Pay yourself first
The key to a stress-free life, where finances are concerned, is to have money put aside for the unexpected. An emergency fund of 3-6 months’ worth of your monthly income for emergency situations can alleviate a lot of stress and financial strain. So, when you get paid each month, put money aside into your savings account straight away for a rainy day. You might be surprised just how quickly and easily the funds build up, providing you with peace of mind that you’re covered if you need help.
Benefit from compound interest
Investing is a long-term goal and should be treated as a marathon, not a sprint. The earlier you can get started with investing, the better the rewards will be for a secure future. Don’t panic each time the stock market takes a turn for the worst – downturns are bound to happen, so you need to accept the fluctuations in the market and hold on. Speaking to an investment professional can help you develop a solid investment plan that will appreciate over time.
Learn how to manage your debt
The majority of people have some form of debt, but it’s important to have a plan in place for getting out of it or you’ll wind up getting into a deeper hole that will be more challenging to get out of. From credit card companies to high interest loans, the goal is to be debt-free as soon as possible, so take stock of your situation and build a plan that will help free you and your family from debtors quickly and sustainably. Being free of debt not only makes each month easier to manage but it also puts you in a better financial position for more positive life goals you might have, such as buying a property or growing your family.
Make sure your protection is sufficient
Life has a way of surprising us when we least expect it, and it’s not always a positive situation that we find ourselves in. If you lose your job, become seriously ill or suffer an injury, how will you cope? Consider how long you’d be able to sustain your lifestyle with your savings and whether long-term care would be viable if you or someone you care about needed it. Insurance policies that provide protection and safeguard you against the unthinkable can remove the stress, whether you choose income protection, critical illness cover, private medical cover or life insurance.
Make sure your dependents are protected
If your family are reliant on your income each month, you need to prepare for any event that might leave them in a difficult financial situation. If you pass away, how will your family find the money for your funeral? It’s a difficult topic to discuss, but it’s an important conversation to have. Take the time to talk about the different options available, and if possible, put money aside for the future so that your loved ones don’t have to struggle when the time comes.
Conclusion
While it’s great to stay positive and hope for the best, life can often throw curveballs that can be difficult to handle if we’re not properly prepared. Financial planning doesn’t need to be complicated or stressful, but it does require some forward-thinking in order to build security and protection for the times when you’ll need it the most. Savings are important, but they’re not the only way you can safeguard yourself against financial difficulty. So, consider what you can do to protect yourself and your loved ones from any unforeseen circumstances that could come your way.