Financial Planning Strategies for Late Starters
When it comes to planning your financial future, it is never too late to start. If you have found yourself neglecting your budget, not saving for retirement, or just falling behind on planning your financial future, you are not alone. Even if you have never made an effort to financially plan, there are still many opportunities to do so, no matter your stage in life or your current financial situation. Here are some planning strategies for late starters.
Create a Budget
In order to reach your financial goals, it is key that you follow an organized budget to help keep your savings and decisions on track. Start by going over your non-negotiable expenses—the money you spend monthly on your mortgage, insurance, payments and savings. You should also set aside money for an emergency fund, which you can use if you go through a sudden and major life event. Subtract these expenses from your overall income, and with the leftover money, you can calculate how much you can spend on negotiable expenses.
Elevate Your Investments
Investing your money will help you grow your wealth, especially if you’re a late starter. However, because making investments involves taking some risk, it can be a daunting task. There are many investment types you can choose from, including stocks and bonds, real estate and Exchange Mutual Funds. If you work with a financial professional, they can help you choose the best investment options for you. One strategy many financial professionals recommend is diversifying your portfolio—meaning you are investing in a variety of industries, asset classes and categories. Diversification helps you minimize the risk you take when you invest your wealth.
Take Advantage of Catch-Up Contributions
If you are approaching retirement, but don’t have the adequate savings you’ll need, there are still steps you can take to reach a comfortable retirement. Maximizing your 401(k) or Individual Retirement Account (IRA) contributions is incredibly important when you are saving for retirement. As a late starter, you may have the opportunity to capitalize on catch-up contribution policies. Catch-up contributions allow those over the age of 50 to contribute more to their retirement savings accounts than the rest of the population. For example, in 2023 you can contribute $7,500 to an IRA annually if you’re over 50 years old, in comparison to the $6,500 the rest of the population can contribute. If you are part of a 401(k) plan, you can contribute up to $30,000 to that account versus $22,500 if you are under 50 years old.
Work with a Financial Professional
Creating a financial plan can be challenging, especially when you get a later start. Enlisting the help of a financial professional can help make the process of planning your personal finances easier, and give you the peace of mind that you are making the best decisions for your future. At Emerj360, our financial professionals are up to date on market trends, and have the experience and expertise to help you navigate financial planning strategies. You can schedule an initial meeting online with a member of our team to get started.