A rock-solid financial plan ensures that your assets are working to secure both your short- and long-term stability. Having a clear financial strategy also brings invaluable peace of mind, as it reassures you that you are on track to achieve your life goals. While it may sound like a given, 65% of Americans lack a financial plan, according to Schwab’s Modern Wealth Survey.
Financial planning can get a bad rap, with the common misconception that it’s costly, complicated or inaccessible. Johnson Financial Group is here to set the record straight and show you just how simple and straightforward creating a financial plan can be. With the guidance of a trusted advisor like an expert from Johnson Financial Group, it’s easy and empowering to set yourself up for financial freedom.
First off, what exactly is financial planning? Consider it a detailed roadmap to all of life’s milestones, along with the keys to unlock them. With this holistic framework in place, you’ll be in the driver’s seat, equipped to make all the right turns to identify and achieve your financial goals. Because everyone has a unique and personal vision for their future, no two financial plans will be exactly the same. That’s why it’s important to tailor financial planning to individual circumstances and goals.
Johnson Financial Group is ready to help build personalized plans that will provide clarity on lifestyle goals, mitigate unnecessary risk, empower smart decision-making and move you confidently in the direction of your dreams. Here are 10 simple steps that the trusted experts at Wisconsin’s No. 1 privately owned bank will guide you through:
1. Set clear goals
Without clear and concrete goals, your finances can put you in the passenger seat and take you for a bumpy ride. Take the wheel by outlining your personal goals, which are the milestones you envision as part of a fulfilled life. A solid financial plan should be rooted in knowing what makes you happy, what actions you need to take to achieve that happiness and what getting there will cost. After all, before hitting the road you’ll want to ensure you’ve got a full tank of gas to get you where you’re going — without needing a tow truck.
2. Get familiar with your current financial situation
To get where you want to go, you need to know exactly where you’re starting from. While this may sound simple, taking a closer look at your income, expenses, assets and liabilities will empower you to build a smarter roadmap. While many people have a broad idea of their financial situation, a trusted advisor can provide the magnifying glass needed to see the full picture. Achievable tweaks to your current financial landscape can amount to huge financial gains over the long term. This can mean the difference between dreaming of your goals and achieving them as reality.
3. Create and stick to a budget
Creating a budget ensures that your current spending aligns with your future goals. A budget can keep you on track to spending within your means. A popular method with proven success is the 50/30/20 method, which breaks your finances into categories of needs, wants and savings. This method ensures that you’re putting half of your income towards essentials like food and rent while leaving the other half to be split into things you want, such as vacations, and savings that you need to achieve your life goals. Allocating your budget in this way takes out the guesswork and will keep you on track for financial freedom. Learn more about how to create a budget that works for you.
4. Build an emergency savings fund
Part of realistic financial planning is realizing that achieving one’s goals often comes with unexpected setbacks. If you or your spouse experience sudden health issues or a job loss, having up to six months of living expenses saved in a dedicated account will help you get through challenging times.
5. Have a debt management strategy
Not all debts are created equal. Having a game plan about how to best tackle debt, like credit card balances, will help your hard-earned dollars go further in the long run. Paying these off quickly will also help your credit score, a factor that plays a large role in taking on more meaningful debt, such as a mortgage for a first home. Don’t worry if you don’t have a degree in debt management — that’s where working with a trusted advisor comes in handy.
6. Start your 401k today
The earlier you start saving for retirement, the more secure your future self will be. An advisor can strategically advise how much to put toward your 401k and other potential employee savings plans. Small contributions today can grow exponentially over time.
7. Build a diverse portfolio
Beyond traditional retirement planning such as opening a 401k account, investing in stocks, bonds and annuities can also pave the way to a richer future. Advisors are well-versed in the nuances of different investment vehicles and can advise on the best options that align with your risk tolerance and short- and long-term goals.
8. Ensure your insurance plan is on track
Insurance coverage protects your future self from all the things that can go wrong. From health to auto to homeowner’s insurance, reviewing your various coverage plans with an advisor is a great way to ensure that you are putting proper protections in place, for whatever comes your way.
9. Plan your estate
Building an estate plan ensures that you leave behind the legacy you want for your loved ones. Strategically protecting your assets for posterity gives you and your family valuable peace of mind and ensures that all your current financial planning will go the distance.
10. Regularly reassess
Life changes quickly and your financial plan should be ready to pivot accordingly. Whether you’re starting a new job with a higher income or planning to expand your family, checking in with your advisor can ensure that your plan is set up to support your evolving goals.
Now that financial planning has been demystified into the logical, step-by-step process that it is, it’s time to start yours today. Connect with an advisor at Johnson Financial Group to either start or reevaluate your existing financial plan. The confidence that comes with a strategy for your financial future is more than worth the time – it’s priceless.
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