Financial planning is the process of looking at your financial picture at a glance, and usually, a professional advises clients on how to achieve their goals. Sovereign CPA is Birmingham’s go-to for financial planning, estate planning, and much more. If you want to learn more, we’re the best place. Here, we will discuss when you should start financial planning and how to do so.
When to Start
When You Start Making Your Own Money
The first time you should start financial planning is once you start earning, regardless of age or income. Of course, there is nothing wrong with celebrating your first paycheck! But years down the road, you will be happy that you started on the right foot by planning ahead.
By taking up financial planning now, it is easier to spend wisely, stray from credit cards, and maintain healthy financial habits.
The Second Best Time to Start Is Now
If you have already started working, there is always time to look into financial planning. Even if you have made some mistakes along the way with spending or lack of saving, you can still make changes, even if you don’t know your best options. Any questions or concerns you have should be approached with well-structured financial planning offered by a professional at Sovereign CPA.
A Guide to Get You Started
Set Financial Goals
Before sorting out your plan, you must ask yourself the following:
- What kind of goals do I want to achieve?
- Why am I saving my hard-earned money?
- What is it that I want the most out of my money?
Having clear goals can make it much easier to maintain discipline, stay on top of finances, and manage to spend.
Create a Budget
Consider your budget a monthly cash flow and savings/investing plan. In simpler terms, set aside a number of earnings that is dedicated to paying bills and another number that you can spend on yourself. By doing this, you will know how much you can spend in a month. It could also be helpful to make a note of your spending every time you make a purchase so you know where your money is going.
Plan for Taxes
Planning for your taxes can help you get the most out of the following year’s tax return. You can always work with a financial advisor, who will provide a tax planning worksheet. These worksheets run through potential income tax credits and deductions. Paying your taxes can be tricky without guidance, so don’t hesitate to call on help from a professional!
Build Your Savings and Emergency Fund
You never know when an emergency could happen, so it is always a good time to start looking at how you can build a savings or emergency fund. When deciding how much to put into your savings, it is important to think about the following:
- How much money are you left with after paying the bills?
- How much can you comfortably put in?
- How much you make.
A good rule of thumb is to put some money into your savings biweekly or monthly, even if it’s just a small amount. After all, something is better than nothing! It is also essential to take into account estate planning. Contrary to popular belief, estate planning can be started at any point in life and should be started before the later years of your life. Estate planning is important, as it directs your belongings to specific individuals of your choosing. If you need assistance with estate planning, contact Sovereign CPA today.
Plan for Retirement
Even if it is a long way off, it never hurts to prepare for the future. When planning for retirement, it is important to think about what you want and need your money for when you stop working. After identifying these goals, you can proceed with creating a financial plan to make those goals happen, as well as begin estate planning.
Talk to Our Estate Planning Professionals in Birmingham
Here at Sovereign CPA, we firmly believe that financial planning is the first step toward success for both individuals and businesses. If you want to reach your goals and thrive, our Birmingham consultants are here to help. Contact us today or call (205) 402-4245 to learn more.