January 5, 2018

Seeing Your Financial Future


Getting your personal finances where they need to be for your current life might be all you think you can handle right now, but here’s a guide of a few things to be doing now and in the near future to ensure your financial life keeps steadily improving as you march through your working years and on towards retirement. Use this guide to know what to do right now to improve your financial outlook, what you need to be planning to do in a few years, and what to have on the horizon of your thoughts to take care of in a decade or so as you advance personally and professionally.

Now

1. Pay down any outstanding debt. Debt is a wealth killer. Get on a healthy plan to pay more than the minimum on each and all debts, paying down high-interest credit card debt first. Then, aggressively tackle student loan or other debts. Any debts you have to pay each month significantly will slow down your ability to save or invest.

  1. Pay your bills early or on time. Now is the time to improve your credit score, and being a consistent, reliable bill payer will go a long way to building your credit – or your ability to borrow money in the future.
  2. Set aside as much as possible – but at least 10 percent – for retirement. Set aside at least as much in savings.
  3. Review your benefits needs and adjust if you can. Also, get a life insurance policy for each parent.

In 5 Years

  1. Now that at least some, if not all, of your monthly debt from credit cards and student loans is gone, build up your cash reserves. Plan to have three-to-six months of normal income in a liquid account. This is your emergency fund for household repairs, unexpected emergencies or a cushion if you experience a job loss.
  2. Be sure you are fully vested in your company’s 401(k) or retirement planning. Start contributing more than even your company will match.
  3. Consider opening a secondary investment account – such as a Roth IRA – to additionally bolster your retirement savings. Many employee-matched accounts will not be enough to live off of once people retire, and additional accounts are needed to supplement what is being saved by employee/employer accounts.
  4. Once savings for your retirement is on the right track, save for your child’s college needs. Start a 529 college savings plan, and start saving as soon as it is financially feasible given other debts and retirement needs.

In 10 Years

  1. In 10 years, it is reasonable to assume that most debt is under control and savings are on your radar. If not, stop and make debt reducing and personal savings your top priority.
  2. Likewise, you should be participating in your company’s retirement investing. Now is the time to sit down with your financial planner, either through your work account or through Tulsa Federal Credit Union, and get a retirement check-up. They will be able to guide you to see if you are saving enough and what your after-taxes income would be currently as well as in 10 or 15 years, or whenever you’d like to retire.
  3. In 10 years, you will probably be earning more. Consider investing this money in additional tax-deferred savings accounts or donating to charities.
  4. Avoid any new debt. Now that you are on a roll with savings, and having already paid down your debts, avoid any new debts. This includes any debts associated with your growing children. Have a loving, but frank, conversation – if your kids are grown – with them to ensure they understand your new role in their life.

Take your financial planning in steps, looking at what to do now, and what you’d like to be doing in 5, 10 or 15 years. Just like any goal, financial success comes one step at time, one good decision at a time. Go slow, don’t get overwhelmed, and you will soon look back and see just how far you’ve come with your finances.

This article is for educational purposes only. Tulsa FCU makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.