Keys to Retirement Planning

According to statistics, the average credit card debt per person is over $5.500.  Individuals who do not have a handle on the big picture of their personal financial world should understand the steps of financial planning and get started today.

The first and most important step of financial planning is organization.  By organizing your finances and understanding money flows, you can be much closer to your financial goals in life.  Excel spreadsheets are great organization tools.  However, using something a little more sophisticated such as Mint or Quicken may become necessary as your financial life evolves.

There are so many different ways to approach organization, but the “how” is nowhere near as important as the “when.”  The best time to begin organizing is now.  Whatever method you choose, once you create a system, enter financial information dating twelve months back.  This enables you to evaluate your spending patterns and look at investment accounts from a top-down perspective.  This is a great time to adjust your allocation for a more efficient portfolio.

After you organize everything in an efficient manner, you need to maintain this organization over time, which requires discipline.  Make sure to balance your checkbook every month and keep your information up-to-date when you receive the credit card and investment statements.  Sort through your information and know what is happening with your cash flow and investments.  Do not be tempted to pull out of the market after a big loss or start buying in the market when there is a huge run-up.

See Jim Blankenship, Successful Retirement Planning Requires 3 Steps, USA Today, Dec. 14, 2014.