Beginning your financial planning and wealth management journey can seem daunting. With so much to consider, like your current financial standings, future goals, and how your finances can change over time, it is often difficult to figure out where to start.
However, setting financial goals one step at a time while keeping a flexible mindset will allow you to not only manage your finances on a short-term basis but also holistically plan and work towards your overall goals over time. Here are a few tips on where to begin in your financial planning journey:
Consider the Short-Term AND Long-Term
When we think of financial goals, we often make the mistake of only considering our future endeavors. Furthermore, those long-term goals are oftentimes so large and ambitious that they might seem impossible to achieve, or we have no idea how to get there.
It’s fundamentally important to regard our current status to create an accurate plan for where we want to go. In this, creating short-term goals must include day-to-day responsibilities and approaching expenses.
For example, if your credit card billing date is at the end of the month, you’ll need to create a budget (or alter your existing one) to make sure you can pay it off without incurring any interest or fees. This budget may include sacrificing other things, like eating out or opting for cheaper groceries. In these smaller budgeting moments, you are navigating your current situation and priming yourself to manage your finances and achieve your long-term, larger goals in the future.
A step beyond the day-to-day, short-term planning is mid-term planning or thinking five to ten years ahead. These plans may include buying a house, an engagement ring, or sending your children to school. Consider your current budget and how much you can put away to dedicate to these goals. Are you able to consistently match that number in your savings? If so, how much will you have saved in five to ten years? In this, you’ll be able to determine your buying power and whether your current budget fits your buying needs. By mapping this out in advance, you allow yourself the flexibility to adjust your budget and investments for the long run.
By considering the now and the near future, you are preparing yourself to achieve financial stability and your long-term goals, which can include retirement plans, insurance, emergency funds, and more.
Create a Plan
Now that you have defined goals, how do you achieve them? Similar to coming up with goals in the first place, it’s fundamental to start small and turn each large goal into smaller, actionable items.
Working with a trusted financial advisor can assist you in creating these smaller milestones that will allow you to work more cohesively towards your long-term goals. This can include creating a strict budget, accounting for different saving objectives, creating multiple streams of income, utilizing other savings accounts (such as retirement saving platforms), and more.
By creating smaller, consistently achievable milestones and checking them off on a persistent basis, you are tangibly working towards your short-, mid-, and long-term goals.
Prepare for Potential Downside
Initially, we mentioned the importance of flexibility in beginning this process. It’s critical to remember that not everything will go according to plan. Sometimes life throws us unforeseen circumstances, whether that be periods of unemployment or emergency expenses like sudden deaths or illnesses. Preparing for this can include building a savings bucket that can sustain you for at least a six-month period in which you wouldn’t be able to save, otherwise known as an emergency fund.
Ultimately, ensuring flexibility in your budget is essential to creating a cushion so that potential downsides due to unfortunate events don’t derail your financial planning and goals entirely.
Idaho Medical Association Financial Services Is Here to Help
Working with a trusted financial advisor to kickstart your financial planning journey can alleviate the unnerving task. Idaho Medical Association Financial Services is among the top Medical Wealth Management firms in Idaho, with offices located in Boise. At Idaho Medical Association Financial Services, we focus on helping each of our clients create long-term wealth while maximizing the gratification they receive from their money now.