Create a Financial Plan and Stick to It for the Long Term
by David C.
(New York, NY)
Financial planning is easy; sticking to the plan is harder. The key is creating a workable plan that you believe in and sticking to it for the long term.
Some key elements of creating the financial plan are to write it down and to work on the plan with your spouse so that you both agree.
A key element that all financial plans need is to live below your means now while you are still working. If you and your spouse are both working now, you need to create a financial plan that is based on saving money -- that is spending less money than you earn after taxes right now. The reasons for this are clear: In the future, one or both of you may not be working, or you may earn less money in the future, or you may have an unexpected major expense such as health care bills.
Living below your means today allows you to build savings for use in the future.
The second key is to put that savings in some low-risk investments such as savings accounts, certificates of deposit, annuities, tax free municipal bonds, or tax advantaged individual retirement accounts.
The third and most important key is to just stick it with it for the long term: You are building a financial plan that is designed for your entire lifetime to carry you into retirement. You want to design a plan that is simple, safe, flexible enough to allow for changes in your life, and one you are both comfortable with.
Once you have that nest egg of savings built up, you will be able to breathe a little easier when a rainy day comes knowing that you have prepared yourself well. So enjoy your life and be happy; that is what a solid financial foundation is all about.