What To Consider In Your Financial Planning: Don't Forget The Details

Posted on: 24 November 2014

When it comes to planning your finances, you may be at a loss as to where to start. After all, you are young and just starting out in the world, just getting yourself established in your career and finally getting away from living paycheck to paycheck. Now that you have extra cash on your hands, you can start your official financial planning. You may think that you should just sock you extra money away in a standard savings account. While this is one option, you should consider diversifying you financial planning strategies to properly prepare for your future.

Here are a few things to consider in your financial planning:

Set Up An Emergency Fund

First and foremost, when you start your financial planning, you should start an emergency fund for yourself. The bigger your emergency fund, the more secure you will feel, so put as much money into that fund as possible from every paycheck. 

Your aim should be to have at least a couple thousand dollars in your emergency fund at all times. This would be enough to take care of emergency car repairs, unexpected medical bills, and emergency home repairs should you need them.

Try to put at least $20 to $50 dollars per paycheck or more per month into your emergency savings fund. This will add up quickly and help you to feel secure in your finances. 

Planning For Retirement

You may think it is too early to start planning for your retirement. Since you are just starting out in the working world, retirement seems like an eternity away. However, planning for retirement needs to start early if you want to have enough money to live comfortably when you hit retirement age. 

If your new job offers a 401k or other retirement savings plan, make sure you partake in those plans. When you employer offers to contribute to your retirement account, take them up on it. Never turn down free money from your employer.

If you do not contribute to a company-sponsored retirement plan, set up an individual plan. Try to contribute between one and five percent of each paycheck to your retirement plan. Over time and with interest, this will add up to a large nest egg for retirement, but you need to start right away. 

Planning For Funeral Expenses

While it may seem a little morbid, you should also plan finances for your end of life. You do not want to leave the burden of paying for funeral expenses to your loved ones. Instead you want to provide the people you love with the money they will need to provide you with the funeral and burial (or cremation) you deserve. 

So, when you are planning your finances, consider either a separate savings account for just that purpose or invest in a life insurance policy. Once again, you probably think it is too early to think about such things. But, the harsh reality is that it is never too early to take financial precautions in this area. 

Paying funeral expenses can be an unwelcome and unaffordable for your loved ones, so make sure you set money aside for this purpose.

When it comes to planning your finances, it is never too early to start preparing for the future. Now that you are no longer living paycheck to paycheck, start planning and saving for your future.