A Nike®-inspired checklist to help you plan
Whether you’re a millennial, baby boomer, Gen X or Gen Z, you face financial questions besides just getting through to next payday. Here’s a simple Nike®-inspired checklist to help you start planning with your money.
Just plan. Critical for long-term success, your financial plan doesn’t need to be complicated, but it does need to provide a starting point and create a baseline for measuring your goals. Your plan can serve as a basis for budgeting too. If you're having trouble getting started, consult a financial advisor to help get started.
Just invest. With time on your side, invest early on to maximize your returns. Keep investments simple and costs low initially. For instance, consider low-cost, broad-based index funds in your portfolio to diversify holdings, reduce management expenses and mitigate tax consequences.
Automating transfer of money from your paycheck to your investment account streamlines this process. You can start with a small amount of your pay until you get more comfortable, and increase amounts later.
Just budget. You have to know exactly how much you need per month to live. Guessing is just setting yourself up for failure.
The easiest way to create a budget is to look at what you currently spend. Grab your utility bills, bank statements and credit card statements for the last three to six months, and calculate how much you spend in major categories like groceries, eating out and car expenses.
These categories will change in retirement, but having an idea of what normal feels like before retirement is a good place to start. You should also factor in inflation, which increases the price of goods each year.
While inflation is currently hovering around 2%, use a more conservative estimate and assume that prices will increase by as much as 3% to 5% each year.
Just plan for retirement. It’s never too early to create a retirement plan. Retirement accounts provide tax-deferred growth, a powerful feature to help boost long-term returns and provide income decades from now when you stop working.
If your company offers a 401(k) plan, see if your employer matches a portion of your contributions. At the very least, contribute enough to receive your full company match, often around 5% of your annual pay (though percentages vary).
You should also review what sources of income you have during your retirement. This may include a pension, Social Security or part-time work.
You also need to think about long-term care insurance to pay for things like nursing home costs. This can be costly as well, but the earlier you get into a plan, the lower your overall premium is.
Just eliminate debt. Pay down all your debts by your retirement date or even sooner. Getting out of debt early in life makes retirement planning a much smoother process. There’s nothing more terrifying than having a significant drop in income because of retirement and having a mountain of bills to pay.
Just cut fees. Creating a financial plan includes physically reviewing all statements, pay stubs and other financial documents – make sure you review the actual documents, not summaries. Every fee means less money in your pocket. See how many fees you can reduce or remove in the year and reinvest those dollars in a retirement account.
Just look. If you neglected to open your brokerage statements or log into your 401(k) account for over a year, you’re long overdue. Make sure you saved enough during the past year and are on track to save enough before retirement. It is always a good idea to overestimate your needs.
Just do it. According to reports from CNBC, 75% of Americans are going it alone, without the help of a financial advisor. The plain truth is that too few people plan their finances, and if they had a good advisor, they would be way better off.
Everyone should have a financial advisor. But not just any advisor – a good advisor, and the right one for you.
Just do it.®
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