If you’re looking to make the most of your hard-earned money, then it’s time to learn about life cycle financial planning. In this guide, we will cover the basics of life cycle financial planning, what role financial advisors play in the process and how they can help you make smart money choices throughout your lifetime. Let’s get started! What is life cycle financial planning and how can it benefit you?
The stages of your finances
You might be thinking, How am I supposed to know what the future holds? That’s a fair question. Of course, no one knows for sure what will happen in the future. However, there are some general guidelines when it comes to finances that can help us plan for anything that might come our way. The first thing to do when creating a financial plan is to take into account your current income and expenses. What is life cycle financial planning and how can it benefit you?
Life Cycle Financial Planning helps us plan for the stages we’ll go through
A traditional approach to financial planning is called Life Cycle Financial Planning. It helps us plan for the stages we’ll go through such as when we’re a student, starting a family, getting older, or retired.
How Life Cycle Financial Planning Helps
Life Cycle Financial Planning starts with a budget to help your family understand how much money they spend each month, what money will be left at the end of the month, and what their monthly expenses are. It also includes creating a timeline for when you want to retire. This will give your family a better idea of what needs to happen in order to retire by that date. Life Cycle Financial Planning covers many aspects of managing your finances like retirement, college savings, emergency funds and more.
Let’s try an example together
Life cycle financial planning is a type of wealth management that takes into account both the short-term and long-term needs of the client. It focuses on three major areas: retirement, preservation of capital, and growth.
Summary and next steps
Life Cycle Financial Planning helps plan for major events that may have a significant impact on your future quality of life. One of the major events that people don’t typically plan for is retirement, but it shouldn’t be overlooked. Instead of waiting until you are close to retirement, think about when you want to retire and start saving now so that you are ready for the future. Another important part of Life Cycle Financial Planning is education.