How to Plan Financially for 2013

Some rights reserved by Joe LanmanBelieve it or not, 2012 is almost at its close. It has been a rough financial year for most, with a few bright spots. As of this date, we still do not know what is going to happen with the “fiscal cliff” either. Next year could be worse, if some predictions come true. How do you plan for this type of unknown financial climate?

There are numerous approaches. Some will plan conservatively, some with risk, some with flexibility, and some will just swing by the seat of their pants. Come to think of it, most people plan for everything the same way. It goes without saying that most plan for their life events the way they plan for the weekend. Is this the best approach? It is hard to say which works best for everyone, since everyone has a different risk tolerance. And life is often about managing risk. However, preparation really is the key to making sure that you are living the best financial life you can.

A certified Financial Planner is a great person to start with when you are beginning to plan for your future and some aspects of your everyday life. Estate planners are great for planning for the end years, something we should all keep in mind. But overall, you need to take some responsibility for managing your day-to-day life yourself.

The best way to plan for your immediate future is to educate yourself about your environment; do not live with your head in the sand. Make sure that you are keeping abreast of what experts predict is happening with the economy. What does the unemployment situation look like in your town and in your state? What jobs are likely to be going away and what types of jobs are increasing? Make sure you pay attention to what is happening at your place of employment also. Are your skillsets adequate? Make sure you are prepared if you need to switch jobs and get more education if you can afford it.

Do you have enough savings to get you through hard times? There are various estimates of how much of an emergency fund you should have, but it varies from 3 months to 9 months. Start saving a little at a time towards that fund. Usually you should fund that first, over college savings or similar types of savings. Do not neglect your retirement savings though, unless you really have to.

For those with credit card debt, keep an eye on interest rates. It is a great idea to go through your bills and know what your interest rate is. Call the companies and ask for a better one. Alternatively, shop around for a card that might be a better deal for you.

And with the tax changes still unknown, make sure you are aware of how much less money you might have next year. This is an area when many might be caught unaware. Some tax changes could leave you with less money in your pocket, and goods and services costing more.

Next, when is your enrollment period at work? Most employers have a limited time for you to enroll in benefit plans. Do not miss that date. Think about a flexible spending account if you have access to one. Do you have disability insurance? Consider whether or not that is a good idea for your life. Life insurance might also be important so that you can provide for your loved ones should you leave this life sooner than you planned. Compare costs with independent coverage though; do not assume your employer has the best rates on insurance of all types. In addition, pay close attention to what types of coverage is offered at each rate. Do not assume you are comparing apples to apples without thorough research, always compare coverage carefully.

As for spending for pleasure, always consider large purchases thoughtfully. Can you truly afford them if the economy goes south? Will you be ok financially even if you have unexpected medical bills or car repairs? Can you really afford another monthly bill? These are all things to consider in a tenuous economy. Saving up for a purchase and really considering if you need it, rather than impulse buying, is often recommended in uncertain financial times.

Even with all the planning in the world though, debt and bankruptcy can strike even the most careful individuals. Attorney Christopher D. Smith with SmithLaw of Lakewood Ranch, Florida understands this and offers free bankruptcy consultations. SmithLaw also offers debt mitigation and estate planning services.

Image: Some rights reserved by Joe Lanman

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