Retirement Planning Dreams

Some people love tools. For every part of their life there is a gadget or tool to keep things going. When it comes to personal financial planning, there are lots of available tools. Some financial management tools are extremely beneficial, and others are a waste of time and money. Here are a few financial tools everyone should have in their financial tool box.

A Budget

A budget is something you create. It’s extremely important for everyone, no matter how much money you make. It’s the most important way to maximize your income. For those who have financial problems like excessive debt, a budget should be more detailed and restricting (restricting until the debt is gone and a responsible financial habit is formed). Those with high income and low expenses have more room to breathe in their finances and don’t have to be as strict or detailed.

A Goal Sheet

Open up a word document or an excel spreadsheet. Write out every financial goal you can think of that you want to achieve. Such goals may include:

• Pay Off Debt (student loans, credit cards, auto loans, mortgage, etc.)
• Buy a House
• Pay for a College Education(s) (for yourself and/or your kids)
• Buy a New Car
• Retire
• Retire Early
• Buy a Vacation Home
• Take a Vacation
• Remodel your House
• Quit your Second Job
• Buy New Clothes

A goal can be as big or small as you want. Include them all. Set up a plan for completing your goals. On the same document write a due date next to each goal. Print the sheet and paste it where you’ll see it often. Always keep these goals in mind when you make future financial decisions.

Financial Management Software

A software program, such as Quicken or Mint.com, will help you execute your budget. Some programs are free and online, and others are downloadable software programs. You could even make your own with an Excel spreadsheet or use good ol’ pen and paper. This tool is your plan to help you complete your goals and manage your budget.

A Savings Account

At some point or another, you should save up 6 to 8 months worth of living expenses and put it in a savings account. This will be your emergency fund. Whenever there is a financial emergency, you’ll be covered whether it’s due to job loss, car problems, medical needs, or another emergency expense. Open a high interest savings account to help you get to your goal faster with a higher interest rate while keeping the money accessible.

Retirement Accounts

Retirement must be one of your top financial goals. Set up a 401K and a Traditional or Roth IRA, or the equivalent if you’re a government worker or self-employed. A tax-advantage retirement account is an important tool to help you reach your retirement goals faster and ensure that you live a comfortable retirement when that day comes.

Filed under: Early Savings, Still Working... on October 4th, 2011