Are you an ant or a grasshopper? Well, you all might have read this famous Aesop fable about “the ant and the grasshopper.” This fable has moral implications for people of all ages and these virtues come in handy for financial planning as well. So, if you are managing your finances, you better be an ant and start planning today to create the financial future you desire. Don’t be sorry later like the grasshopper in the fable. It is not the case, that you are not working hard to save, but you need to act at the right time and make some important decisions when opportunity knocks. When you are in thirties, you seem to care less about financial planning because you think you still have some more time to think about financial planning. This is the biggest mistake people make. So, here are a few tips for financial planning.
Assess your Life Stage
Whether you are in your late twenties or early thirties, saving even a small amount can be a game-changing decision later. Whether your aim is to retire happily or you are planning to send your children to Ivy League school, it is important to assess your current and future needs on a regular basis. Therefore, financial planning and saving is as much important for a young professional as it is for a Gen-Xer (Generation X). It is just that the needs of these different generations are different, but the goal is same and that is to achieve financial freedom.
Everyone seems to be asking this “how much is too much?” when it comes to savings. According to financial experts and economists, you need to literally force yourself to save enough to meet your financial goals at every stage of your life. Most experts suggest a magic number of 10% of pre-tax income, which will end your financial woes. However, if you cannot make a huge change, start with 5% and slowly add up to 10% or more. So, no saving is small so long as you are getting into a discipline of saving.
Automate your Investments
Saving money to meet your current and future needs is not enough, you need to invest that amount in order to build wealth. In his book titled “Automatic Millionaire”, David Bach suggested pre-established or automatic plans are the number one wealth building strategy. Whether it is 401k or 529 savings plan, set up an automatic investment plan, so that you can control that urge to splurge and start building wealth.