7 Financial Planning Basics Everyone Should Have

Everyone should have some sort of financial plan. But it doesn’t have to be complicated, and it doesn’t have to be a lot of work.

At minimum, here are the 7 fundamentals a basic financial plan should include:

1. Budget

When it comes to budgeting, the old saying, “If you fail to plan, plan to fail,” rings true. It’s hard to control your spending and saving if you don’t track and direct where your money should go. Take advantage of tools such as apps or our handy budgeting worksheet that can help with budgeting by doing the legwork for you. Budgeting can be as simple or complex as you want it to be. The best budget is a lot like the best diet or exercise plan – it’s the one you can stick to.

2. Emergency fund

Financial advisors typically recommend keeping three to six months’ worth of expenses, or an emergency fund of at least $1,000, in an easily accessible savings account.

If you’re struggling to figure out how to even start saving, check out this article for 2 small changes you can make now to easily save $10,000 in 4 years.

3. Retirement savings

If your company offers a 401(k) plan, take advantage of it. Saving for retirement is very important, and contributing toward a 401(k) plan is a way for you to easily save for your future. Contribute as much as you comfortably can while meeting your other financial obligations – with a minimum goal of maximizing matching contributions from your employer.

If you don’t have an employer-sponsored retirement savings plan, open an IRA (individual retirement account) to grow your money faster with tax-deferred earnings. You can call our retirement participant service center at 855-225-2355 Monday through Friday 7 a.m. - 7 p.m. central time for help.

4. Insurance

Life is unpredictable. While you don’t want to spend your life worrying about what might happen, it is important to be prepared. Insurance can help you prepare for the what-ifs in life.

A solid financial plan includes more than health insurance, auto insurance and homeowners insurance. You should also consider life insurance to protect your family or business during your working years and long-term care insurance, which helps cover the costs of assisted living, nursing home, or in-home care.

Contact us for a quote and to make sure you have the coverage you need!

5. Will

A will is the most basic way to plan for your estate. It provides a framework for planning funeral arrangements, distribution of your belongings, guardians for minor children and appoints a personal representative to see that your assets are distributed appropriately.

A will can also create a trust to hold assets and instruct a trustee as to how to administer and distribute those assets. A trustee may be appointed to manage assets for beneficiaries, until the beneficiaries are responsible enough to manage the assets on their own.

It is important to note that a will does not replace the need to name beneficiaries and transfer on death directions for your financial and retirement accounts.

6. Health-care directive

A health-care directive appoints someone to make health care decisions on your behalf if you are not able to do so.

7. Financial power-of-attorney

A financial power-of-attorney appoints someone to make financial decisions if you are unable to act, such as if you’re on vacation, in another country or in the hospital.

Our experts are more than willing to help you make sure your financial plan is solid. Schedule an appointment today to get started.

What to Check Out Next

• How to Make Your Money Work for You
• 5 Habits of Financially Successful People
• Stepping into Retirement

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