Money & Career
Life Planning Cheat Sheet
1/3/2019 12:10:37 PM
Life Planning

It’s easy to hear the words "financial life planning” and dismiss it as something you don’t need until your life becomes more complicated or until you have amassed millions. But what if I it’s actually something you need in order to prevent a complicated life and build your wealth?

If you don’t have a financial or life plan yet, don’t stress. Here are five simple steps you can take action on now to start building or fine-tuning your plan today.

1.Develop your vision.
This is the fun part. Goals are important, but developing your vision goes beyond goal-setting. Dig deep and identify what your exact vision is for your life. It’s the first and the most important step because everything else in the plan depends on your vision.

2.Create and automate your savings system, aka The Bucket Strategy.

There are three buckets you need to fill:
  • Short Term – These are your emergency funds, which everyone needs. Consider your bucket filled when you have three to six months of living expenses saved, depending on your situation. Not having emergency savings can dramatically mess up your financial plan, i.e. if you need money in a pinch (taxes, flooding, broken A/C) you don't want to pull out of your retirement savings or vacation funds. You need to plan for the unexpected, which means you need savings to support you during the times life doesn't go perfectly.
  • Intermediate Term – These are your larger expenses like saving for the down payment on a home or new car, vacations or anything else you’ll need a large sum of money for in the near future.
  • Long Term – This is your retirement savings (IRAs, Roth IRAs & 401(k)s). If you have access to your employer’s retirement plan, find out who you can talk to about your options and possible matching opportunities, and make an educated decision on what you can afford to contribute. 

3.Revisit your investments or finally start investing.
If you’ve already started investing, whether it's through an advisor, a 401(k), an IRA, or an online investing account, the next step is making sure you're in the appropriate investments that align with your time horizon, risk tolerance, and unique goals. Life is changing all the time and so is your financial situation. It may be time to consider hiring a professional to make sure you’re working towards your life goals efficiently and effectively. 

4.Take inventory of your insurance.
Insurance that protects you and your family in case of tragedy and old age is life, disability, and long term care insurance. You only need enough insurance to cover what your "needs" are, which is different for every person/family. Ask yourself, "what will they lose if I pass?" Tally up your income, debt (mortgage & student loans), future education needs, weddings, etc. when deciding how much you may need. 

5.Get these four basic estate documents made.
Most everyone has an estate. Your estate is comprised of everything you own— your car, home, other real estate, checking and savings accounts, investments, insurance and personal possessions. And (spoiler alert!) you can’t take it with you when you die.

Here are the four basic estate planning documents you should have:

A Will provides instructions for distributing your assets to your family and other beneficiaries upon your death. The other crucial part of a will is designating a guardian for your minor children, if you have them.

A Durable Power of Attorney is a legal document in which you name another person to act on your behalf in case you become incapacitated.

A Health Care Power of Attorney authorizes someone to make medical decisions for you in the event you are unable to do so yourself.

A Living Will expresses your intentions regarding the use of life-sustaining measures in the event of a terminal illness.

Tackle these five steps one at a time, but don’t procrastinate. The goal is to have a clear plan in place so you can be prepared before life happens, get back to doing what you do best, and pave the way for the ideal life you want and deserve.


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