The Basics of Financial Planning

You have your hands in your fiscal pocket. You want to make sure you have plenty of green, leafy, ripe lettuce for your future? Enroll yourself in the basics of financial planning 101. Allow me. I greedily rub my hands together at the thoughts of hoarding cash. It makes me feel accomplished, successful and as if I have a giant mesh safety net below me at all times.

Planning. Producing. Reaping. Those are my three steps to financial planning success.

Planning for your future is the vital step when you leap into the workforce.
In America your social security is deducted from your paychecks but you should also have a hearty little nest egg or two set aside for later in life. Most of us will not be able to live on ss alone and we never know what cards will be dealt to us so play the cards you have in your hand now and prepare for your future as much as possible.

Producing savings regardless of your current income should be an average of 10% of your net(take home) pay. It is a tangible goal once you adjust your ways of thinking and most importantly spending. Discipline yourself to subtract this amount every week or however you are compensated bi-weekly, monthly etc…a money market account is an excellent way to transfer your 10%.

It may seem like an unnecessary extra expense to open a money market account but the premier fees pay for itself after 6 months of steady deposits. The temptation to avoid withdrawing money is looming so if the temptation is too great for you invest in a cd instead. The return on most money market accounts is between 3.5 – 5 percent depending on your standing balance and state of residence. Keep this money growing and you may make a large and substantial contribution to your 401k or IRA.

Since we mentioned them we need to address them. Your employer may offer a program to you when you have passed your 90 day trial period. They may offer to match dollar per dollar or 40/60 on your contributions depending on the size of their firm and market positions. Examine your options carefully as upon termination with your employer you may be able to roll over your nest egg but no longer contribute in the same terms so your best bet to is to set up your independent savings plan unless you are 100% guaranteed your position with your company is for life!

For financial planning you must think ahead for the inevitable such as the possibilities of illness, job loss, tuition for children, weddings and the like so putting away extra bonuses instead of spending them is always a great way to play it safe. I lean towards the miserly way of money but I believe in the long run it will pay off so to speak. When you retire and reap the benefits of no monetary worries since you planned ahead you can enjoy your golden years and rest easy.