Oklahoma Centra Credit Unio Logo Small

Creating a Smart Financial Plan

Financial planning isn't just a luxury reserved for the super wealthy. Even without large investments, stocks or second homes to manage, creating a budget and keeping track of your spending habits can reduce money-related stress and help ensure a comfortable future. But if the idea of combing through spreadsheets and crunching numbers sounds stressful to you, take a deep breath. With the right tools, guidance and these simple tips, financial planning will be a cinch.

Set specific, realistic goals.

Ask yourself, what do you want to accomplish in five, 10, 20 years? And don't just say "become rich." Make a list of the top three to five things that you want in your future. Do you want to be a homeowner? Do you plan on having kids? Are you sending kids to college? What age would you like to retire? Narrowing down what you want can help you identify future costs and budget accordingly. For example, if one of your goals is to become a homeowner in the next five years, you'll need to figure out how much money to save on a down payment (a good rule of thumb is to save at least 20 percent down for the best pricing). If you want to retire early, call your benefits specialist or meet with a financial counselor to help you decide how much to invest in your 401k to make that happen.

 Also, keep in mind that even after you retire, taxes will remain an important factor in your overall financial plan. "For example, if you return to work, open a business or move to another state, your tax bracket could change," says Brad Scheidt, Executive Vice President (EVP) for Oklahoma Central Credit Union. "Investing in annuities, mutual funds and tax deferral plans such as IRA, 401(k) or 403(b) plans can help your retirement savings grow despite potential tax changes."

Save, save, save.

Meeting your goals may mean making small sacrifices along the way. Go through your credit card and bank statements – is there anything you can live without? You may need to nix the unused gym membership, lavish trips to the salon or eating out several nights a week to help you save in the long run. Setting up automated drafts from your checking to savings account can keep you responsible and remove the temptation to spend extra cash.

Consider an educational fund.

If you have children (or you plan to), it's best to start an educational fund as soon as possible. Create a savings account solely for your child's college or school needs and dedicate a percentage of your monthly paycheck to it. Many parents also forget to factor in daycare and pre-school expenses, which can add up quickly. Many schools offer financial aid or scholarships, so check to see if your child's desired school has those first. Also, local and religious groups tend to offer the same preliminary educational services at a fraction of the cost.

Plan for the unexpected.

Regardless of your financial situation, investing in reliable insurance is crucial. Having it in case of emergency could spell the difference between a botched retirement and retiring early with plenty to spare. "Health, auto, homeowner's and renter's insurance are no-brainers, but many people overlook disability and life insurance," says Scheidt of Oklahoma Central Credit Union. "If you suddenly fall ill, become injured or disabled, disability insurance can provide you with income until you get back on your feet." Many financial institutions including credit unions offer credit life and/or disability coverage in conjunction with a loan that should also be considered.  If you think this scenario is a long shot, think again. About 30 percent of American workers between the ages of 35-65 will experience some disability lasting longer than 90 days.1 If you have a family, invest in a solid life insurance plan to protect your loved ones.

Start today.

Now that you know the basics of financial planning, it's time to get started. While there are several online programs that can help you invest in a brighter future, the best and most foolproof way is to work with a financial planner in person. Together, he or she can help you assess your goals, come up with easy saving strategies and plan and prepare for unexpected emergencies.

 

 

Back to Top