I'll never have enough money saved up to retire.
My children are going to have to take out student loans if they want to go to college; there is no way I'll ever be able to pay for them to go.
Do any of these statements sound like something you might say? If so, then it's time to take a close look at your financial planning strategies. Successful financial planning requires us to look forward; living paycheck to paycheck won't help you achieve long-term success. Almost anyone can achieve financial success if they really set their minds to it, but it requires careful planning, motivation, and discipline. In honor of National Financial Planning Month, First Bank of the Lake is offering these concrete suggestions for long-term financial planning.
1. Set Up An IRA
An IRA is an "Individual Retirement Account," and it is a key component of building long-term wealth. There are four basic types of IRAs: Traditional, Roth, SEP, and Simple. Each one offers different tax benefits. Our financial advisor at the Lake of the Ozarks can help you identify the advantages each one offers so you can determine which will best help you meet your long-term goals.
2. Make Regular Contributions To Your IRA
Setting up an IRA is only the first step. Once you have an active account, it is important to contribute to it on a regular basis - even if the market is down. By investing while the market is down, you can buy cheaper shares with the potential for a greater return on investment down the road. The value of the market has historically gone up over the years, so as long as you start early and remain consistent, you should be able to to weather the highs and lows.
3. Do The Math
What are your long-term financial goals? Do you want to buy a specific vehicle? Finance your child's college education? Retire early? Once you identify your goals, do the math to determine exactly how much money you will need to save to meet these goals. Having a concrete number to work towards makes it easier to track your progress and stay motivated along the way.
4. Only Use Your Emergency Fund For Emergencies
This tip may seem rather obvious, but it is surprisingly common for people to dip into their emergency funds for non-emergencies. Perhaps they need a few thousand dollars to afford their dream car, or maybe their favorite cruise line is offering a deal they can't pass up. Whatever their reasons, people often misuse their emergency fund. When a legitimate emergency arises and they don't have the funds to cover it, this becomes a significant problem. It's always better to be safe than sorry; hold off on your big purchases until you can make them without having to dip into your emergency fund.
5. Incorporate "Fun Money" Into Your Budget
If you've ever dieted to lose weight, you know that allowing yourself one or two "cheat days" here and there is an important step on your way to success. Without these cheat days, it's harder to keep your morale up and you may be more likely to give up. Similarly, it's important to allow room in your budget for "just for fun" purchases. By allocating funds for these purchases ahead of time, you can allow yourself to have fun without ruining your financial plan.
6. Stay On Top Of Your Spending Habits
Even if you're wildly wealthy, tracking your spending habits is a key component of financial success. No matter what budgeting strategy you choose, it's important to be cognizant of how much you're earning and how much you're spending every month. Identify whether you are "in the black" or "in the red" every month and adjust your spending habits as necessary. Being proactive will help you avoid falling into a bad situation.
7. Don't Assume Any More Debt Than Necessary
A mountain of debt is a death sentence for your financial plan. If a large percentage of your income each month goes towards paying off debts, you may find it difficult setting aside money to save or invest. Avoid falling into this trap by only taking out loans that are absolutely necessary (a vehicle that will accommodate your family's needs, a house for you to live in, etc). Paying your bills in full and on time is also essential.
8. Maximize Your Dollars
Perhaps you invest in CDs. Maybe you use credit cards that offer cash back. No matter what strategies you use for growing your money, you can stretch its value if you think strategically. When your CD matures, for example, you could reinvest your initial principal plus the interest earned in a new CD. When you redeem your cash back, you could apply that money towards the outstanding principal balance on one of your debts. Simple tricks like these can help you stretch your money more than you may realize.
First Bank Of The Lake Is Here For Your Financial Planning Needs
Your financial success is our top priority. If you are looking for a Lake of the Ozarks bank that will keep your best interests in mind as you work towards achieving your financial goals, look no further than First Bank of the Lake! Visit our website for more information about our financial services at the Lake of the Ozarks.
First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.
Located at the entrance to the Osage Beach Premium Outlets!
4558 Osage Beach Parkway
Osage Beach, MO 65065
4558 Osage Beach Parkway
Osage Beach, MO 65065