Starting a financial plan

When you’re young and don’t have many financial responsibilities, you may be able to live comfortably from paycheck to paycheck without a lot of advance planning. But at some point in your life, the things that you want or need will outdistance what you have in the bank. And if you don’t have a strategy in place for accumulating the assets you need, you may find that you have to postpone or abandon some of the things you were counting on.

A financial plan is about looking ahead, so the money is there when you need it, for as long as you’ll need. While everyone’s specific goals and circumstances may be different, a financial plan should help you:

Identify your short-, medium-, and long-term financial goals

Choose strategies to help you meet the ones to which you give highest priority

Provide for an emergency fund

Identifying your goals, selecting the most important ones, and deciding how to achieve them are the crux of your plan. Building an emergency fund will help prevent you from being thrown off track by an unplanned loss of income or unexpected expenses. And practicing good financial habits — such as having a spending plan, investing regularly, and using credit wisely — can help you find yourself where you want to be within the time frame you’ve set.

Louise Yamada,
Managing Director,
Louise Yamada Associates

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