When it comes to money, the Americans obviously have a lot of work to do. An alarming 23% of adults in the United States have no emergency savings, while 42% have less than $ 10,000 wasted on retirement. It is no wonder that 70% of Americans agree that their financial planning needs improvement.
In a recent northwestern mutual study, only 16% of Americans say they would call themselves "highly disciplined planners." Meanwhile, 33% identify as "disciplined planners."
On the other hand, 37% consider themselves "informal planners", while 14% say they are just not planners, and as such have not mapped any goals
If you feel your financial planning can use a print in the right direction, it is important that you give yourself some time to make it happen. And the sooner you do, the better. Here's what your plan of attack would look like.
1. Set goals
Maybe you hope to retire early and travel a lot during the 50s and 60s. Or maybe your primary goal is to put your kids through college. Whatever you are aiming for, find out your priorities so you have something to work on during your financial planning. After all, it is the reason why your savings tactics will be very different if you seek to leave the workforce at age 55 instead of waiting for 65 years.
2. Consider Your Progress
Once you have identified your primary financial goals, look at your savings and see where you stand to meet them. If you are decades away from retirement, it may be tough to consider your egg as it is difficult to estimate your financial needs down the line. But know this: As a general rule, you should aim to have roughly equivalent your salary saved in an IRA or 401 (k) by age 30, three times your salary at age 40, and six times your salary within 50 years. If you are not close to these goals, consider it a sign that you need to address.
Likewise, you should always have at least three months' lifetime costs in an emergency fund. If you do not, you should build that safety net primarily over all other things.
Finally, if you have children approaching college age, you should hopefully have some funds for education. If you do not, it may be time to ramp up your 529 plan contributions. The same goes for any financial goals you have established, but not near the meeting. For example, if you are 32 years old with the goal of owning a home within 35 years and you only have $ 5,000 set aside for a down payment, you will probably do a better job saving in the next few years to get it happen. The point, neither, is to see if you are on the right track to meet your goals or whether you need to make changes to make them meet.
3. Finding a Trusted Advisor
Although you are quite financially knowledgeable, it helps to get input from an expert who can bring an outsider perspective. Remember that when you talk about your personal goals, it is easy to get emotional or fool yourself into believing that you are in a safer place than you really are. On the other hand, an advisor can give you a clearer picture of where You stand and what you need to do to achieve your goals.
Finding a reliable advisor is, of course, easier said than done, so it is best to find recommendations from friends, family members and neighbors. From there, you aim to find a counselor who acts as a fiduciary. That means he or she must put your best interests first at all times when making recommendations.
You also want an advisor who is open about his or her fees and who clearly plays the risk in the investments he or she is proposing. Finally, aim to find a counselor who is willing to educate you on investing so that you are more empowered to make decisions even with his or her guidance.
We are not all planners of nature, but if you do not spend some time in that arena, you will probably be disappointed. So don't let that happen. Establish priorities, assess your progress, and get help from a counselor who is ready to help you. You will be grateful for it when you are in a better place financially.