Planning for financial success throughout your life is not something that happens overnight. It’s a long-term process that requires thought, strategy, and adaptability as your life evolves. But where do you start? What do you need to do today to ensure financial stability years down the road?

Here, we’ll cover the top 10 best practices for financial planning—a roadmap to help you set realistic goals, manage your money, and adapt your strategies as your needs change.

1. Set Realistic and Measurable Financial Goals

The first step in any lifetime wealth plan is having a clear idea of what you want to achieve for the upcoming big life events.  Determine the amount of money needed for each and by when. Without goals, it’s easy to get off track or make short-term decisions that don’t serve your long-term objectives. Define short-term (e.g., saving for a home) and long-term goals (e.g., retirement) and make them as specific as possible.

2. Track Your Income and Expenses

Understanding where your money is going is vital to achieving financial control. Use a good tool for tracking all cash flows, including fixed costs (rent, utilities, etc), discretionary spending, and savings. This will help you identify areas where you can cut back or where you need to allocate more funds to reach your goals.

3. Plan for Emergencies

One of the first things to think about is an emergency fund. Ideally, this should cover 3-6 months of living expenses. Life is full of surprises—whether it’s a car repair or sudden job loss—an emergency fund can keep you from derailing your financial plan. You don’t have to sweat the small stuff if you generally have the money for an emergency.

4. Diversify Your Investments

Don’t put all your eggs in one basket. Diversifying your portfolio across stocks, bonds, real estate, and other assets is one of the best ways to mitigate asset class risk. Details of managing a well diversified portfolio can be found in our other articles on this topic.

5. Maximize Tax-Advantaged Accounts

Take advantage of tax-advantaged accounts like 401(k)s, IRAs, and 403Bs. Depending on the account type, these accounts allow your investments to grow tax-deferred. The tax savings can have a significant impact on your long-term wealth. These qualified pre-tax retirement plans often have a unique set of additional incentives like employer matching, bankruptcy protection, minimizing marker-timing risk.

6. Plan for Major Life Events

You’ll encounter significant financial milestones throughout life—buying a home, having children, or starting a business. Planning for these moments can prevent financial stress. These are most likely goals you have already defined. For instance, saving for a down payment long before house hunting starts or setting aside funds for future education costs. Have a tool to manage these events, goals, and their effects on your retirement and beyond.

7. Protect Your Assets

Insurance is a vital part of any wealth plan. Health, disability, and life insurance protect you and your family against life’s uncertainties. Understand what the right coverage is to protect your wealth from unforeseen events. Revisit these decisions such as Term Life insurance throughout your lifetime.

8. Regularly Review and Adjust Your Plan

Life changes—and so should your wealth plan. Whether it’s a promotion, marriage, or market fluctuations, reviewing your plan annually ensures you’re still on track. Be flexible and make adjustments as your financial circumstances evolve.

9. Start Planning for Retirement Early and continue during your retirement

Retirement may seem far away, but the sooner you start planning, the better off you’ll be. Maximize contributions to retirement accounts and take advantage of compound interest over time. Include all savings in your plan, not just retirement accounts. The longer you save, the less you’ll need to catch up later.

10. Incorporate Estate Planning

Finally, don’t forget about estate planning. Writing a will, setting up trusts, and keeping beneficiary designations up-to-date ensures that your assets are distributed according to your wishes. Also, consider if you have a bequest goal, to whom, and how much.

Conclusion:

Lifetime wealth planning isn’t about quick wins; it’s a long-term process of building, protecting, and managing wealth. By following these ten best practices, you can ensure financial stability and adapt as your life and financial needs evolve. WealthFluent can help streamline this process, offering Lifetime Wealth Planning tools to define your goals, track your progress, and keep your plan on track every step of the way.

Additionally, what WealthFluent does differently than most, the platform helps you determine a financial plan for lifetime spending goals jointly with your choice of risk and expected return trade-offs. The process builds an investment strategy (benchmark) from current options the financial market is offering to help you truly determine the feasibility of your Lifetime Wealth Plan.

Up Next 

Stay tuned as we dive into the world of retirement planning.