Elements of Financial Planning PART2

Debt
Your plan for debt should be to get out of it! For many households, not all debt is bad. In fact, some types of debts, for example mortgage debt, can be a good thing. It means you have crossed a major milestone and are on your way to owning a home. Being in debt may also mean you have a reliable car to get you to and from work or perhaps you’ve sent your child off to college for a good education. However, if you’re using credit to pay for routine expenses like food, entertainment or gas, you may be headed for a debt crisis. If debt is excessive and interfering with the other elements of your financial plan, consumer debt consolidation may be right for you. Don’t worry, because if you develop a comprehensive financial plan that includes a budgeting strategy, some of your debt dilemma may take care of itself.

Tax
Didn’t someone say that the only sure things in life are death and taxes? Did you know you can create a tax plan that can help you minimize your tax liability? Make sure you have the knowledge on how to cut your taxes and what steps you can take to shelter your income from taxes. Many of your financial planning strategies come with tax implications. Read up on income tax tips here. While you cannot eliminate taxes from your life, you can make informed financial decisions so you only pay the taxes you have to pay and no more.

Estate
Like it or not, you are going to pass on from this life sooner or later. Do you want to leave the distribution and taxation of your assets to fate? No matter how much your assets are worth, most people will want to have a say in who gets what and when. See estate planning articles here. There are several steps you may want to take to ensure your heirs get what they are entitled to, and that Uncle Sam’s portion is minimized.

Retirement
Make sure your golden years are happy years. You’ll want to be able to enjoy your later years in life so make sure you plan up front. You have many options available to help you prepare for your retirement. You may probably earn millions of dollars during your working years; make sure you have evaluated what your situation will look like when you are ready to retire and take steps to ensure you are well prepared for your golden years.

Pulling It All Together
The underlying theme to creating a complete financial plan is to set goals. You can define a set of goals that relate or interrelate to each of the seven planning categories identified. Or you may just want to focus on certain aspects of financial planning, depending upon your current age and financial situation. However you decide to approach financial planning, make sure you set precise, realistic, and achievable goals. You can control your financial destiny if you decide that it’s important enough. For more information on developing a financial plan, see the Federal Citizen Information Center guide Building Financial Freedom. If you want to learn more about financial planners, the Certified Financial Planner Board of Standards, Inc., offers a free Financial Planning Resource Kit.

Take control of your finances and debt. Use our calculators and budget planner to help you manage your money.

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