Tips on How to Build a Life Plan for the First Time
So you’ve never thought about creating a life plan before? That’s ok. Many people think they need to wait until they are gainfully employed and have their whole life figured out in order to start life planning. This couldn’t be more wrong. You need to take steps to plan your life well before you have everything figured out. Having said that, part of building a life plan is taking a step back and trying to figure out your desired life trajectory.
Take a step back and focus on your desires
Most life planning advice begins with sitting down and planning a budget, starting to save, and figuring out how you want to invest to prepare for retirement. Don’t get me wrong, all of that is important, but before you can do any of that you need to take a step back and think about what you want out of life. Forget the money for a second. How do you see your life progressing? You can’t begin to make complicated financial decisions until you answer this basic question.
Forbes has some good advice on this:
“What are your means at hand, your talents and skills, who you know, what you know? And how do you get started on concrete actions that are consistent with these desires? Some of those may take the form of looking for a job, but others might simultaneously entail starting something of your own. In either case, as you act, different opportunities will present themselves.”
Only when you start to figure out what you want out of life, which may include anything from starting your own business to obtaining a degree to help you succeed in your current line of work, can you begin to steer your finances toward those goals.
Get granular when it comes to predicting your future expenses
Any financial life planner will tell you that you need to save for an “emergency fund” – a lump of money that you can use to pay for things like unexpected medical expenses, car trouble, and temporary job loss. This is something everyone needs to do and you can be pretty generic about it.
But when it comes to figuring out how you should invest, you need to know your own financial goals. And the only way to know your own financial goals is to get really specific about your future expenses. (Lauren’s Financial Freedom Journey can help you get started)
Will you buy a home? How large will it need to be? Do you want kids? How many? Can you pay for child care? Will they go to private or public school? What about college? How about travel? When do you want to retire and how much money will you need to have saved in order to live comfortably? And on, and on, and on…
As you can see, there’s a lot to think about, but it’s absolutely crucial to be as comprehensive as possible when building a life plan. It’s also important to remember that it’s never set in stone. Life is all about the unexpected, so you have to be able to adapt.
Don’t forget that “life” includes death
It may be hard to think about, but every life plan must also plan for death. It’s irresponsible not to. A good tip when looking for life insurance is that “compare apples to apples,” as Protective group puts it:
“When getting price quotes on life insurance, be sure that you are comparing similar products. Because term life generally has lower premiums than a permanent life policy, there can be a big price difference for a $50,000 term policy compared to a $50,000 permanent policy. Depending on your coverage needs, it’s important to look at every angle, not just the monthly premium.”
You also need to have your affairs in order concerning the bequeathing of property. If you don’t have your will in order, you can place an undue burden on your family after you pass.
Photo Credit: Pixabay.com
Guest Post by Brittany Fisher
Financiallywell.info | brittany@financiallywell.info
