financial plan http://www.wisebread.com/taxonomy/term/9767/all en-US How to Create a Financial 5 Year Plan http://www.wisebread.com/how-to-create-a-financial-5-year-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-create-a-financial-5-year-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/7678960512_5f04ffd410_z.jpg" alt="planning" title="planning" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>&quot;Most people don't plan to fail; they fail to plan.&quot; &mdash; John L. Beckley</p> <p>Where do you want to be five years from today, financially?</p> <p>My guess is that your answer probably sounds something like this &mdash; &quot;I want to be in a better position than I am now.&quot;</p> <p>We all have dreams we want to pursue and goals we want to achieve. We want to make progress in our lives.</p> <p>But do you have a clear idea of what you want financially? Have you given it some serious thought?</p> <p>If you haven&rsquo;t, then the days, months, and years will still pass by. But at the end of that time, you&rsquo;ll likely comment that not much has changed. Or that you&rsquo;ve been stuck in a rut.</p> <p>Instead of vaguely wishing for a better financial future, create an actual game plan. It&rsquo;ll serve as your roadmap to get you where you want to go. (See also:&nbsp;<a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-financial-plan">Financial IQ Test:&nbsp;How Healthy Is Your Financial Plan?</a>)</p> <h2>Questions to Ask Yourself</h2> <p>First, let's ask some key questions about four financial fundamentals to find out where you are and where you want to go. Get out a piece of paper, and start writing!</p> <p><strong>Debt</strong></p> <p>Do you have debt? If so, how much?</p> <p>Dumping your debt is an obvious way to move into a better financial position. You can&rsquo;t build wealth until you dig yourself out of debt.</p> <p>How soon do you want to be debt free? One year? Two years? Three years?</p> <p><strong>Income</strong></p> <p>Your income is your greatest wealth-building tool. How much money do you make now?</p> <p>More importantly, how much money do you want to be making in five years?</p> <p><strong>Emergency Savings</strong></p> <p>No job is 100% secure. If you were to lose your job, how long can you stay afloat and keep your bills paid? The size of your emergency fund will answer that question.</p> <p>How big of an emergency fund do you want in five years?</p> <p><strong>Retirement</strong></p> <p>Many people doubt that Social Security will provide anything of substance in the future, and pensions are fading away. As such, we&rsquo;re all responsible for making sure we have a comfortable retirement nowadays.</p> <p>How much do you want to have saved up for retirement in five years?</p> <h2>Create Your Plan</h2> <p>Now that you&rsquo;ve answered these questions and have them written on paper, it&rsquo;s time to create a plan. Write a statement for each area that describes how you&rsquo;ll achieve your goals.</p> <p><strong>Debt</strong></p> <p>How are you going to pay off your debts faster?</p> <p>Example statement:</p> <blockquote><p>I will be out of debt in two years. To make this happen, I will <a href="http://www.wisebread.com/30-great-side-jobs">find a part-time job</a> working evenings and weekends, an extra 10 hours a week. And for the time being, I will cut all expenses that aren&rsquo;t absolute needs. These are temporary sacrifices that I will make until I&rsquo;m debt-free.</p> <p>As far as steps are concerned, I will utilize the <a target="_blank" href="http://www.daveramsey.com/article/get-out-of-debt-with-the-debt-snowball-plan/">snowball method</a> popularized by Dave Ramsey. I will pay off the debt with the smallest balance first in order to get a quick win and build momentum.</p> </blockquote> <p><strong>Income</strong></p> <p>What kind of job do you want? How much do you want to be making? How are you going to qualify for that type of work?</p> <p>Example statement:</p> <blockquote><p>I now make $60,000 per year as a project analyst. I will be making $85,000 per year as a project manager by January 1st, 2018.</p> <p>To qualify for this position, I will take advantage of my employer&rsquo;s tuition reimbursement program and take project management courses on the weekend to expand my skill set. I will demonstrate my skills by asking for opportunities to lead projects. And I will stay up-to-date on advancement opportunities by checking job postings monthly.</p> </blockquote> <p><strong>Emergency Savings</strong></p> <p>How big of an emergency fund do you want?</p> <p>Example statement:</p> <blockquote><p>Within five years, I will have an emergency fund that&rsquo;s big enough to protect me for 12 months. I will follow this <a target="_blank" href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund">step-by-step emergency fund guide</a> to help me achieve this.</p> </blockquote> <p><strong>Retirement</strong></p> <p>How much do you want to have saved up for retirement in five years? In 2013, you can save $17,500 in your 401(k). You can also save $5,500 in your <a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras">Roth IRA</a>. Let&rsquo;s say you contributed the maximum amount to both accounts. That&rsquo;s a total of $23,000 each year. How can you do this?</p> <p>Example statement:<strong> </strong></p> <blockquote><p>I will save $211 each pay period and have it sent automatically to my Roth IRA using direct deposit. By the end of the year, I will have contributed the maximum amount of $5,500.</p> <p>I will also save $673 each pay period and have it sent automatically to my 401(k) using direct deposit. By the end of the year, I will have contributed the maximum amount of $17,500.</p> <p>With both my 401k and Roth IRA, I will have saved up $115,000 in five years.</p> </blockquote> <p>Think of this as your financial mission statement. Customize your answers to fit your personal situation, and then follow through on your commitments. Read your plan daily to stay motivated. You'll be amazed at what you've accomplished five years from now.</p> <p><em>Have you created a five year financial plan? How have you kept yourself on track?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/darren-wu">Darren Wu</a> of <a href="http://www.wisebread.com/how-to-create-a-financial-5-year-plan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-spending-3-on-you-will-advance-your-career">Here&#039;s How Spending 3% On You Will Advance Your Career</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-jobs-proven-to-make-you-live-longer">5 Jobs Proven to Make You Live Longer</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/invest-your-time-in-these-13-things-while-youre-in-your-20s">Invest Your Time in These 13 Things While You&#039;re in Your 20s</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-are-what-you-do-16-ways-to-improve-your-body-language">You Are What You Do: 16 Ways to Improve Your Body Language</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-things-to-do-with-your-bonus">6 Smart Things to Do With Your Bonus</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Debt Management Personal Development 5 year financial model financial plan reducing debt retirement planning Mon, 11 Feb 2013 10:48:32 +0000 Darren Wu 967631 at http://www.wisebread.com Help! My Money Scares Me!: Tips for Educating Yourself Without Feeling Overwhelmed http://www.wisebread.com/help-my-money-scares-me-tips-for-educating-yourself-without-feeling-overwhelmed <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/help-my-money-scares-me-tips-for-educating-yourself-without-feeling-overwhelmed" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2554703529_42577b7644.jpg" alt="Feeling lost?" title="Lost" class="imagecache imagecache-250w" width="250" height="211" /></a> </div> </div> </div> <p>Do you feel lost at the very idea of having a budget, let alone a comprehensive financial plan? Does it make your head hurt to think about how much you make and how much you spend? Does keeping track of your finances make you tired?</p> <p>Relax.</p> <p>Breathe.</p> <p>Listen.</p> <p>It&#39;s not as scary as it sounds. it&#39;s not as scary as it looks. In fact, planning where your money goes doesn&#39;t have to be scary at all. </p> <p>When you hear someone talking about money in ways that are foreign to you, or read things in a magazine or on the internet that you don&#39;t understand, it&#39;s natural to feel lost, sick, or tired. The fact that others understand it and it&#39;s about money makes you feel like you should know what&#39;s going on, and the fact that you don&#39;t makes you feel inadequate, stupid, or not good enough. That&#39;s the cycle, but it doesn&#39;t have to be like that.</p> <p>Instead of listening to what others say, go out and make your own financial plan. Make one that reflects your lifestyle, values and personality. It&#39;s totally possible, and the suggestions below will help.</p> <p><strong>Relax</strong> </p> <p>Never deal with financial issues when you&#39;re feeling negative emotions. Even if your negative emotions are about your money, it&#39;s possible to step outside, take a walk or at least a couple of deep breaths, and let those feelings go. Once you&#39;ve done that, you&#39;ll be able to approach a financial plan, whatever that means to you, with a clear head. You&#39;ll be able to process the information in front of you and make decisions based on what you see there, not on what you feel.</p> <p><strong>Learn</strong></p> <p>If you don&#39;t know where to start, look to the Internet or go to the library and ask a Librarian. Money and financial planning isn&#39;t any more difficult than high school algebra, and you passed that! You can totally do this. If someone uses a term you don&#39;t understand, look it up. If you hear about a new investment, do some research. Even if you don&#39;t have a budget and you&#39;ve realized you need one, you can find easy, detailed instructions for making one in so many places.</p> <p>The key to learning more about money is realizing that it&#39;s not beyond you. Sure, you don&#39;t understand it now, but that&#39;s because you haven&#39;t looked into it. Once you have, you&#39;ll be the one tossing words around that other people don&#39;t understand. All it takes is a little time focused on learning about money, and you&#39;ve got it made. </p> <p><strong>Examine</strong></p> <p>Once you&#39;ve gathered information, look at your own money in light of what you&#39;ve learned. Is that new type of investment appropriate for where you are in life and for your goals? How do you have to adjust your budget if you have an irregular income?  This is where your new knowledge and your actual life situation interact. It&#39;s not enough to study, you have to figure out if and how the information you learn is relevant to you.  </p> <p><strong>Act</strong></p> <p>Now that you not only know more information, but you know how it applies to you, you&#39;re ready to implement what you&#39;ve learned. Sometimes, this means doing nothing. Even then, you&#39;re still acting. You&#39;re choosing not to explore a certain option at the moment because of something that&#39;s particular to your current situation. Other times, acting means that you make some changes. Maybe you implement that budget, or reallocate some investments. Maybe you talk to a broker or decide you want even more information. Whatever it is, you do it.</p> <p>Now, that wasn&#39;t so bad, was it? </p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/help-my-money-scares-me-tips-for-educating-yourself-without-feeling-overwhelmed">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-steps-to-budget-mastery-in-20-minutes-a-month">8 Steps to Budget Mastery in 20 Minutes a Month</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/it-takes-a-frugal-spouse-to-make-a-frugal-home">It takes a frugal spouse to make a frugal home</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/budget-busters">Budget Busters</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-money-adjustments-you-should-make-mid-year">12 Money Adjustments You Should Make Mid-Year</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/in-times-like-these-separate-the-want-from-the-need">In times like these, separate the want from the need.</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance budget financial plan money plan Fri, 12 Sep 2008 18:23:54 +0000 Sarah Winfrey 2419 at http://www.wisebread.com