Planning for Your Financial Future
When investors think of investing, they may immediately think of investing for retirement. While a financial strategy should include investing for retirement, there are other pieces of the puzzle to consider.
Establishing a budget, investing early and regularly, saving for college, and starting an estate plan should also be included in that complete financial strategy.
Establish a Budget
Establishing a budget is a great first step toward a sound financial strategy.
A budget is a planning tool used to record all income and expenses. By writing down how much money is earned and spent each month, it's easy to see where the money is going and makes prioritizing expenses and needs easier.
Any money left over can be used for saving and investing. Even a small amount of money invested regularly can help.
Invest Early and Regularly, Even Small Amounts
The best reason to start a regular investment program early is to give the money set aside as much time as possible to grow through compounding.
If you haven't started investing yet, it's best to start now and get in the habit. Just remember that the amounts invested do not have to be large, especially if the money is taken directly out of each paycheck. You will be surprised how you don't miss money you don't see.
If you're already investing every month, look for ways to contribute more through bonuses and monetary gifts.
College Tuition Planning
Preparing for your children's or grandchildren's college education is important, especially when tuition costs are rising every year. Your plan might include investing in the Coverdell Education Savings Account, which allows tax-free withdrawals for qualified education expenses for both K-12 and college. You might also consider either prepaid tuition or a College Savings Plan. These 529 plans allow higher contribution limits and tax-free withdrawals for qualified higher education expenses.
Estate planning is a strategic approach to coordinating the distribution of everything you own before and after you die.
You may think you don't have enough money to worry about an estate plan, but such a plan plays a critical role in everyone's financial plan.
It is an ongoing process that involves the creation, conservation, and distribution of property. The "plan" could be as simple as having a will or could require the use of life insurance, trusts, business continuation plans, or charitable arrangements.
When developing a financial strategy, consider all the pieces to the puzzle, not just retirement, so that you're prepared to meet all the expenses in your financial notebook. Your registered State Farm® agent can assist you in developing that plan. Simply click, call, or stop by your neighborhood office to be better prepared for your financial future.
Investing involves risk, including potential for loss.
Automatic investment plans do not assure a profit or protect against loss.
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