Many of us are vastly approaching the light at the end of the tunnel. For those of us that are getting ready to graduate, it can be an exciting (and quite scary) experience. We’re getting ready to transition into a new phase of our lives. This is where the excitement of adulthood comes in. For many of us, this will be the first time we will be faced with the responsibilities of rent, car payment, car insurance, water, electricity, gas, health insurance, life insurance, etc, without any help from Mommy and Daddy. This is what we’ve spent the past umpteen years of our lives preparing for. With that being said, one must fully grasp the importance of financial planning.
Planning your financial future is one of the most important things you can do in your life. If you want to be successful in every aspect of your life, you have to plan. Whether you’re planning for owning your first home or planning for a vacation, having a financial plan set in place is significant.
The first important step in planning your finances is to have a monthly budget that includes expenses, savings, and investments. According to the National Association of Personal Financial Advisors, NAPFA, 56% of U.S. adults lack a budget. Having a budget set in place will help you figure out where your money is going, and makes you more aware of where you need to cut back to pay off debt and contribute to savings. A monthly budget not only helps with your long-term financial goals, but it also helps your short-term budget issues disappear.
The next step is that you can ensure that your future is a more secure. You will be able to protect your household against an unforeseen loss of income. The economy isn’t at its best for anyone right now. There used to be a time if you lost your job today, you can more than likely get another one the next day. It seemed like they were handing out jobs to anyone willing to work. Nowadays, you have to practically cut off an arm in order to get a job. Nobody is safe from being laid off, even with a good job. If you have a financial plan in place, you won’t have to worry about the expenses of emergency hospital visits or illness or injury that forces you to go out on disability or take a reduction of pay. Putting extra money away can give you peace of mind, and you won’t have to worry about living paycheck to paycheck.
Having a budget set in place will make you more knowledgeable about your finances, and about money in general. As you become more familiar with your budget, the more ways you can discover to save more money from your monthly income. That $7 you spend on a cup of Starbucks coffee each morning will look mighty good in your savings account, especially if you’re saving up for a house or vacation.
The ultimate goal in everyone’s life is being able to retire comfortably. Only financial planning can lead up to this. This is the most important reason as to why you plan in the first place. Nobody wants to be a burden to their family. Having a financial plan in place now is essential if you want to have a comfortable and independent retirement. No one is certain of what the future may bring, but being able to have your life under control is absolute. Having a thought out budget can allow you to be protected now and be protected in the future.