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Savvy Finance

Let’s Look At The Different Stages Of Financial Planning

Few things remain as constant a necessity throughout our lives as what the need for ongoing, solid financial planning is.  Traditionally, we used to see our brokers as we started our careers or when we got married and that was it, but now life economics have changed so much and so quickly, that that’s just not going to be good enough anymore.  Young people, in particular, are putting off saving for later on in their careers and are concentrating on getting on the property ladder first (not necessarily a terrible idea) but it can backfire. But, not all of us are financially minded or even good with numbers, so how do you know what decisions to make and when?  We’re taking a look at that.

BEFORE WE BEGIN…

We’re never going to be able to unpack all of the intricacies and specialist advice that proper financial planning requires in this post because everyone’s level of saving and planning ability is different and happens with varying degrees of urgency and or sophistication.  So we must say that while we mean to offer some solid advice and direction, we’re not qualified to speak to your circumstances and so as with all advice-based posts, make sure that you speak to a qualified financial advisor about your situation.  They’re best placed to offer you a range of products that are designed for your circumstances and saving abilities, but with all of that being said, let’s get you a little inspired, shall we?

FINDING THE RIGHT FINANCIAL ADVISOR FOR YOU

No matter at what stage of your life you’re in, you’re going to need some solid advice on how to manage your financial matters in the present and moving forward, and although we’re going to try and keep this post, light-hearted it would remiss of anyone meaning to give advice not start with this bit: the sooner you start your financial planning, the better.  You can’t start soon enough but this is definitely one area in life where you can start too late.  At least late enough for your plans to have any real effectiveness, so the sooner you get cracking, the better.  Most financial advisors will specialize in at least three types of advice and planning:

*Financial planning as a whole – that is to cover all areas of your financial growth plan

*Investment and advisory services – which covers advice on stocks, bonds, investments and playing the market or trading online and,

*Retirement income planning, which as the name suggests offers advice and planning for ensuring an income throughout your retirement period.

The last category is the one where most people will find themselves exploring in and this is because many of us are still intimidated or lack sufficient knowledge to take on the brave world that is investing and online trading.  This shouldn’t stop you though, get some advice.

While looking for a financial advisor, remember to make sure that they hold valid and authentic credentials, cross-check for references and complaints (you don’t always want someone who is “squeaky clean”, rather you want to know that your advisor acts when things go wrong and more importantly, how they act, so bear that in mind too), and you want to know how they’re getting compensated and if their fees come directly out of your monthly contributions, in which case you may be investing less than you think, or if they charge for their fees separately.  Lastly, you can always get referrals from family, friends, or business connections that are already using someone that they trust.

EARLY START FINANCIAL PLANNING

All things being equal, you want to start your road to financial well-being as early as possible or if you’re a parent you want to inspire your children with healthy habits of your own and when they see you doing well, they’ll want the same.  Today’s world demands a lot from young people who face pressures that the older generation doesn’t even know about or understands.  Increasing pressure to “look” a certain way or “have” certain gadgets all place big amounts of strain on young people’s finances and with the cost of housing skyrocketing around urban centers, many young people are waiting until their 30s before they can afford to buy a house.  That means that you or your parents likely had a solid 10 years on the home-ladder more than your children or grandchildren will have.  With that being said, we’re also living longer and working later than the “baby-boomer” generation will have to so some creative and smart planning can help mitigate that.  There is no secret to financial independence, it’s simple:  start early, start small and grow your wealth consistently over time.  

MID-LIFE FINANCIAL PLANNING

As you move through your 30s and into your 40s your financial planning goals and abilities are likely to change as well. Hopefully, you’ve started some type of planning and saving and you’re on the property ladder too.  This will place you in a solid position to create your springboard into the next phase of your financial life, but let’s not jump the gun just yet.  There are a few rather crucial things to take into consideration while planning this stage of your finances.

So during your “mid-career” phase, you want to maximize your savings potential as much as you can and this may include developing a passive or additional source of income (first prize, absolute first prize) because any additional savings that you can muster over and above what you’re currently able to do will make dramatic differences to the result. Today, many people will invest in precious metals like gold and silver coins or like to buy stocks and bond for long term investment. Think of it this way: you’ve had your best party years in your 20s and some of your 30s, so keep those memories active by maintaining healthy relationships with your friends and reliving your glory days but only every once in a while.  Think of your 40s and 50s as your work years and designate them as such.  Keeping your eye on the prize will guide your decisions and keep you focused, so it’s also a good time to decide on what the prize is, for you.  

In the upcoming years, you want to maximize your 401(k) contributions, maximize contributions to an IRA, and you want to create medium-term savings plans to cover annual costs like insurances, vacations, college planning perhaps.  If you’re able to settle short-term insurance costs annually you can often negotiate better rates so apply that strategy to other monthly charge obligations and see how you can unlock precious cash flow each year, by planning for it the year before.

PRE-RETIREMENT INTO RETIREMENT PHASE

As you move through your 50s and head into your 60s it’s again time to consult with your financial advisor for advice on what’s about to happen next.  As momentum speeds up towards your retirement date, it is a very good idea to check in on your investments and other portfolios to make absolutely sure that they’re performing well enough for you to retire as planned.  If not, you may have to add in a few more years’ worths of work to help buffer any poor performance.  It might sound like a drag but here’s a sobering reality check: there are no do-overs in retirement.  Putting retirement off for a few years if necessary is a lot easier than finding that you don’t have enough to retire on and then trying to get back into work a few years later.  With that being said, more and more “silver-surfers” are entering the economy again at later stages in life as (turns out) their skills and knowledge are being increasingly valued in an age where theoretical experience can be gained with an “app”.  So you could provide part-time consulting or training to buffer your retirement income, without losing out on those wonderful days of nothingness that you’ve worked very hard to get to.

Too many people make the mistake of overspending in the early days of retirement and this is having detrimental effects on societies the world over, as governments are coming under increasing pressure to extend greater social security benefits to an aging population that either didn’t or couldn’t plan for their retirement properly.  But you’re still going to need good financial advice well into your retirement years as your financial needs and considerations change.  This is where you want a fresh look at your wills and estate planning, Final Expense Insurance, and getting advice on how to minimize your tax obligations or the potential tax issues that your children and grandchildren could face when you’re gone.  It’s not a fun conversation but it’s one that you must have and it’s doesn’t have to be bleak, think of it as your lasting legacy for a life well lived and lived in abundance.  

Financial management and planning don’t have to be shrouded in myth and jargon and this is why you have to find the right financial planner for you and your family. Having solid financial goals and safety nets can help mitigate and buffer unplanned events (think global pandemic) or disasters and putting of unnecessary or “luxury” spending now means more cash flow and an easier ride later.  Something of something is always going to be better than, something of…nothing.

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