Whether you are a novice or a financial guru, the first place to start for financial planning is goal setting. Money is something everyone needs to survive. But you may want to use it to thrive. Goals can be as simple as daily living maintenance. Or it can be extravagant for a luxurious lifestyle. Goals can also factor in providing for loved ones or minimizing taxes. After understanding and writing your goals, write down your monthly expenses and income. Here is an example with a few ideas:
| Goal 1: pay my bills for food, home, utilities, transportation - $3467 | ||||||
| Goal 2: plan for a trip with my family - $2000 | ||||||
| Goal 3: plan to leave savings for loved one - $5500 | ||||||
| Expenses per month | ||||||
| mortgage | Real estate taxes | Home/ car insurance | groceries | utilities | Car payments | |
| $1500 | $500 | $167 | $600 | $700 | 0 | |
| Total Expenses | $3467 | |||||
| Income per month | ||||||
| Income | Investments | |||||
| $3500 | $500 | |||||
| Total Income | $4000 | |||||
| Total savings per month | $533 | |||||
Financial Investing is a source of supplemental income. If interested, then one must have an account at a brokerage firm. Iinvestments can range in risk levels. Equities or stocks of companies are most risky. Great knowledge must be gathered about companies and market trends. Important factors to consider when investing in equities are P/E ratios, growth, debt, moving day charts, economic environment, and analyst reviews. If you wish to take risks, but do not wish to study the market, then find a financial advisor. Fees usually range from .04% to 1.25%. There are other ways to invest such as mutual funds, ETFs, bonds, CDs, and options. There are many sources that provide information on these topics like Yahoo Finance.
It is also good to know some things about tax laws. We are taxed on income and then on goods and services. Finally, our assets are analyzed at our death where estate taxes are applied. The government allows a certain amount of money to be transferred without being taxed. For more information, visit
https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
To prepare further, we must think about a will. Without one, our assets could be tied up for years without distribution. Assign your bank accounts, funds, properties and more to the people you want, whether it be to your spouse, descendants, or charity.
Some of this can be overwhelming for Seniors. Seek guidance when needed… a trusted friend, a family member, a recommended financial planner or lawyer can provide clear advice and help with a plan.