Whether your goals include buying a home, saving for education, or planning for retirement, developing a financial plan can help you understand your current position and work toward your goals.
A financial plan generally involves:
• Understanding your current financial situation
• Setting and prioritizing financial goals
• Implementing saving and investment strategies
1. Develop a Clear Picture of Your Current Financial Situation
Create a budget by:
• Identifying monthly income and expenses
• Evaluating spending habits
• Monitoring spending regularly
Include all income sources and categorize expenses into fixed and discretionary expenses. Remember to account for irregular expenses such as holiday gifts and vehicle maintenance.
Budgeting tips:
• Make saving a regular habit
• Include occasional rewards
• Review and adjust your budget regularly
2. Set and Prioritize Financial Goals
Separate goals into short-term and long-term objectives. Examples include building an emergency fund, paying down debt, purchasing a home, saving for college, or retiring early. Prioritize goals based on importance since not all goals can be pursued simultaneously.
3. Implement Saving and Investment Strategies
Determine how much each goal will require and choose investment strategies based on:
• Time horizon
• Risk tolerance
• Liquidity needs
Tailor investments to goals such as retirement, education, major purchases, business ownership, or wealth accumulation.
Managing Debt and Credit
Tips:
• Track balances and interest rates
• Create a repayment plan
• Pay high-interest debt first or consider refinancing/consolidation
Credit reports are used by lenders to evaluate creditworthiness. Maintain a positive payment history, limit unnecessary credit inquiries, review your credit report regularly, and correct any errors. You are entitled to one free credit report annually from each major credit bureau through www.annualcreditreport.com.
Credit Traps to Avoid
• Spending more than you can repay each billing cycle
• Hidden fees and interest charges
• Failing to pay transferred balances before promotional rates expire
• Missing payments, which can negatively affect your credit
Working with a Financial Professional
A financial professional can help review your financial position, develop a plan, recommend strategies and products, monitor progress, and adjust your plan as needed. Final financial decisions remain your responsibility.
Disclosure
This document is a reformatted version of the original Janney/Broadridge educational handout.
