The Stages Of Financial Planning
During the course of a lifetime, there are different stages for financial planning much like the 4 seasons in a year. Through financial planning, it helps people on having better understanding of where you currently stand financially, how to plan for where you like to go and on how to prepare yourself for the challenges that might be ahead of you.
Basically, different situations call for unique aspects such as circumstances which you start implementing a financial strategy and age. Simply put, the stages of financial planning consist of the following.
Number 1. Building assets – at the start of your career, accumulating assets is mostly the focus of your finances. Your capability of earning income might just be the most valuable asset you have and thus, investing in your career is crucial. In addition, it will be a very smart move of you to establish emergency fund, pay off student loans and build your personal savings.
Number 2. Invest for future – as you become a more successful person, so does your finances, which give you power to increase discretionary income. You have to plan and save for your future goals similar to comfortable retirement and/or a child’s education at this stage. To be able to have opportunities for potential growth, make an effort to have a tax diversified and well balanced portfolio.
Number 3. Planning for retirement – as you become a step closer to your retirement, it has to be your top priority. You can start it off by thinking of your retirement dreams as well as goals and then, create a detailed plan to which can help you to get there. You want to be sure that you have the flexibility to take income in ways that are tax efficient which will allow you to keep enjoying your lifestyle while being prepared for unexpected retirement.
Number 4. Generate retirement income – as soon as it is time for you to enter retirement, you can now start to implement your retirement plan and enjoying the accumulated assets you have. After few months of enjoying retirement, it will be smart to reevaluate the plan you have just made and do any adjustments necessary to make sure that you are on the right path.
Number 5. Leave a legacy – as you become older and financial secure, leaving a legacy has become of paramount importance. Legacy is all about the impact you have made on charities, people as well as causes that matter to you. In addition to that, it is about ensuring that you got the right beneficiaries to protect your assets.
It doesn’t matter what stage you are now in financial planning, being able to have legal and financial documents to be structured properly is crucial to transfer assets.
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