Bigelow says if you’re saving for a home, car, college, travel, or retirement, figure out what matters to you. Then, separate your goals into different time periods: one year, five years and more. Once you’ve set your goals, saving money will feel more intentional and keep you moving forward. A financial plan gives you the opportunity to review your goals, update them, and track your progress.
Next, Bigelow says to keep track of your finances. A solid financial plan includes getting a real picture of your monthly cash flow. Start by writing down your income, fixed expenses, and any other expenses you may have. The goal is to give every dollar a job. It doesn’t mean spending every dollar. He says, we want you to see how you are spending your money so you can start spending it more efficiently. Tracking your money is something you need to do on a regular basis and will help you avoid any financial surprises that lie ahead.
The next tip he mentions is to plan your taxes. Many of us don’t think about our taxes until April. But tax planning is an essential part of any financial plan and should be done year round. The choices you make can affect the amount you pay in taxes now and in retirement. Bigelow says you can reduce your taxable income for the year by contributing to a 401 (k) or traditional IRA. The money you put in these accounts also grows tax-free until you withdraw it in retirement. Bigelow says that aside from the tax benefits you currently receive, maximizing your contributions is an important part of increasing your retirement security.
Then Bigelow explained how you can strategize for your long term investments. A long-term investment strategy is part of any overall financial plan. There is a wide range of investments available, including stocks, bonds, cash and real estate. One of the most popular ways to invest is by using a workplace retirement plan, such as a 401 (k). He recommends that his clients save 10 to 15% of their salary in their retirement accounts. Set up automatic increases in your contributions either annually or with each increase.
Finally, Bigelow says that when you’re 5-10 years away from retirement, you should look for a financial professional who can put together a comprehensive financial plan to help you retire with confidence.