Mississippi Money: Let Your Financial Plan Work for You
Summers are hectic. Without the set structure of school, kids schedules are all over the place. Camps, play dates and activities fill the calendar and leave you to figure out the logistics on the fly. Wouldn’t it be nice if you could just get into the swing of things and be confident that your plan was working its magic even when you weren’t looking?
Many people feel that their financial life is like summertime with a child’s demanding schedule. Bills come up and they don’t know how much is in their bank account. They change jobs and a year later they don’t know where their 401(k) went. They look forward to a major purchase and still aren’t sure they can afford it. Modern finances are complex and many people turn to an advisor to get the answers they need right now.
You do not have to dealwith the complexities of your finances alone. With a good plan in place, you can be confident that your finances are running smoothly in the background. Your plan should automate your savings, rationalize your debts and consolidate your assets into an easy to see picture.
I will ceaselessly advocate for automating savings. If your employer offers a retirement plan, start there – raise your contribution a few percentage points and you will hardly notice the difference. Build your emergency savings and taxable investment accounts with an automatic draft from your checking the day after your paycheck hits.
Not all debt is bad, and some is unavoidable. Just don’t let debt get away from you. Low interest, fixed rate debt like your mortgage and car loan should just be on a steady monthly payment. High interest credit cards, store credit and medical debt should be eliminated as quickly as possible. Pay off credit accounts in full every month and you will never have to worry about them!
If you aren’t paying attention, you can easily build up a large number of bank and investment accounts as you move through life. Maybe there is a small investment that your parents set up for you as a child, an old 401(k) and a bank account you haven’t used since high school. Consolidating your accounts will give you a much more clear view on where you stand. When consolidating, make sure you move like accounts to like accounts (not, say, moving a 401(k) into a taxable account).
There are a lot of moving parts to any financial plan, but it doesn’t need to be a constant task for you. Set up correctly, a good financial plan allows you the confidence and freedom to live in the present – not in a to do list.
By Ryder Taff